- Gold trims week’s start losses amid cautious markets.
- US policymakers eye stop-gap funding for immediate relief while staying ready with stimulus plan.
- Brexit deal less likely in 2020 amid outbreak of new covid variant in the UK.
- S&P 500 Futures snap four-day winning streak, eyes on macro for fresh impulse.
Gold prices seesaw around $1,885, following the $5 move at the week’s start, during the early Asian session on Monday. Although Brexit woes and the fears of the new coronavirus (COVID-19) variant weighed down the bullion at the start of Asian trading, hopes of the US covid stimulus favor the commodity bulls. However, traders have recently turned cautious ahead of the official verdict on Brexit and US fiscal stimulus, which in turn keeps the precious metal in a tight range.
Risks remain heavy…
Although US Congress members are likely to have backed short-term stop-gap funding, while also agreeing on the much-awaited aid package of around $900 billion, House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin are yet to make an official announcement. On the other hand, House Majority Leader Mitch McConnell tweets, “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.”
Talking about Brexit, the EU Chairman of the Foreign Affairs Committee David Callister mentioned in a tweet that the European Parliament will not be in a position to grant consent to an agreement this year. The European Union (EU) and the UK have been at loggerheads over fisheries and level playing field as per the latest market chatters.
Other than the US aid package and Brexit, the recent outbreak of covid variant in the UK is also the key driver. London and Southeast England are under the Tier-4 lockdown due to the stated virus while Netherlands and Australia also had one case each. To tame the pandemic from spreading, European countries including France and Italy join Turkey to suspend UK travels.
Against this backdrop, S&P 500 Futures drop 0.36% to 3,703 while Antipodeans and commodities hold lower ground by the time of writing.
Looking forward, the metal traders will keep their eyes on the macro for fresh impulse. Although a stimulus deal announcement can help the gold buyers, fears of no-deal Brexit and virus outbreak probe the commodity’s upside.
Technical analysis
Although a clear upside break of 50-day SMA, at $1,870 now, keeps gold buyers hopeful, the mid-November peak surrounding the $1,900 threshold and 100-day SMA near $1,903 guards immediate upside of the yellow metal. Meanwhile, an ascending trend line from November 30, at $1,852, adds to the downside support.
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