Gold prices are oscillating around $1,885 after the $5 move at the start of the week. The Asian session has seen a tug of war between the bulls and the bears. Brexit woes and fears of the new COVID-19 variant weighed heavily on gold during the start of this Christmas week.
On the other hand, hopes of the US COVID stimulus favor the gold bulls. Nevertheless, traders have recently turned cautious ahead of the official determination and verdict on US fiscal stimulus and Brexit. That scenario has, in turn, kept the precious metal in a tight range.
Risks Still Heavy
Though the US Congress members might have backed short-term stop-gap funding, while also finding a middle ground on the much-anticipated aid package of almost $900B, Treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi have not yet made an official announcement.
House Majority Leader Mitch McConnell on the flip side tweeted:
“As the American people continue battling the coronavirus this holiday season, they will not be on their own. Congress has just reached an agreement. We will pass another rescue package ASAP. More help is on the way.”
Brexit is also affecting the price of gold. The EU Chairman of the Foreign Affairs Committee, David Callister, highlighted via Twitter that the European Parliament would not be in a position to grant any consent to an agreement in 2021. The European Union and the United Kingdom have been at stalemates over fisheries and level playing field as explained by the latest market chatters.
Other than the US aid package coupled with Brexit, the recent outbreak of covid variant in the Uk might also be a major driver. Southeast England and London are now under the Tier-4 lockdown as a result of the mentioned virus while Australia and Netherlands also had one case each. To tame the spread of the virus, European nations like Italy and France have joined Turkey in the suspension of UK travels.
S&P 500 Futures drop 0.36% to 3,703 while the Antipodeans and commodities hold lower ground at the moment.
Technical Analysis
The metal traders in the near term will keep their focus on the macro and fresh impulse. Even though a stimulus deal announcement may help the gold bulls and buyers, fears of no-deal Brexit and another wave of virus outbreak probe the yellow metal’s upside.
A clear upside break of 50-day SMA, at $1,870 now, keeps gold buyers quite hopeful. On the other hand, the mid-November peak around $1,900 and the 100-day SMA near $1,903 are the closest resistance zones for the gold prices.
In the meantime, an ascending trend line from November 30, located at $1,852 adds significantly to the downside support strength. Can gold explode to challenge the all-time highs set in August or will the riskier markets recover and push gold towards $1,600?
