- Gold reduces the week’s starting losses in cautious markets.
- US politicians see stop gap funding for immediate help while they stay ready with the stimulus plan.
- Brexit deal less likely in 2020 given the outbreak of a new variant of Covid in the UK.
- S & P 500 Futures ensure a four-day winning streak and are looking for new impulses.
Gold prices moved around $ 1,885 after moving from $ 5 earlier in the week during Monday’s early Asian session. Although the problems of Brexit and fears of the new variant of the coronavirus (COVID-19) weighed on gold bars at the beginning of Asian trade, hopes for the US Covid stimulus are favoring the commodity bulls. However, ahead of the official verdict on Brexit and US fiscal stimulus, traders have recently become cautious, which in turn keeps the precious metal in a tight range.
The risks remain high …
While members of the U.S. Congress have likely supported short-term stop-gap funding while agreeing on the long-awaited $ 900 billion aid package, House spokeswoman Nancy Pelosi and Treasury Secretary Steve Mnuchin have yet to make an official announcement . On the other hand, Mitch McConnell, chairman of the house majority, tweeted: “If Americans continue fighting the coronavirus this Christmas season, they will not be alone. Congress has just reached an agreement. We will hand over another rescue package as soon as possible. More help is on the way. “
Regarding Brexit, EU Foreign Affairs Committee chairman David Callister mentioned in a tweet that the European Parliament will not be able to approve an agreement this year. The European Union (EU) and the UK have argued over the latest market talks over fisheries and a level playing field.
In addition to the US aid package and Brexit, the most recent outbreak of the Covid variant in Great Britain is the main driver. London and South East England are under Tier 4 lockdowns due to the stated virus, while the Netherlands and Australia each had one case. To tame the spread of the pandemic, European countries, including France and Italy, are joining Turkey to suspend travel to the UK.
With that in mind, the S&P 500 futures are down 0.36% to 3,703 while Antipodes and Commodities are lower at the time of writing.
Looking ahead, metal traders will keep an eye on the macro for fresh momentum. While an economic deal announcement may help gold buyers, fears of a no-deal Brexit and a virus outbreak are testing the commodity’s upward trajectory.
Although a sharp upward move from the 50-day SMA at $ 1,870 makes gold buyers hopeful, the mid-November high around the $ 1,900 line and the 100-day SMA near $ 1,903 immediately protect the yellow metal. An ascending trendline from November 30th of $ 1,852 adds support to the downside.