- Gold flirts with recently flashed one week high, bulls catch a breather after notable jump.
- Vaccine, stimulus hopes favored market optimism, Brexit looms with rumors of a deal.
- Virus woes escalate amid fresh lockdown concerns in the Northern hemisphere.
- Fed is the key despite an active economy calendar post-Asia.
Gold wavers around $1,853/54 after refreshing the one-week high before a few hours during Tuesday’s North American trading. Broad market optimism, mainly led by expectations of the US coronavirus (COVID-19) stimulus and vaccine news, propel the yellow metal. US dollar losses add a cherry to the pie.
Christmas mood?
Gold buyers are in the Christmas mood even as the covid resurgence hints at tough activity restrictions in the US, Europe and the UK. Recently, New York City Governor Bill De Blasio mentioned capacity constraints in the city hospitals likely leading to strict lockdowns while London is heading towards Tier-3 curbs on movements.
To battle the COVID-19, vaccines are the best way. After Pfizer-BioNTech, Moderna is next in the line of the US Food and Drug Administration’s (FDA) approval. Chatters that the FDA approved first fully at-home virus test also favored the mood off-late.
Elsewhere, the US President-elect Joe Biden pushes Congress to pass the aid package “right away” whereas US Senate majority leader Mitch McConnell says lawmakers won’t leave Washington until they get agreement on fresh coronavirus relief.
The Brexit uncertainty continues despite recent chatters that the UK is close to the deal. Further, the US-China tension escalates as MSCI is up for delisting 10 Chinese companies from its global investable markets indexes.
Against this backdrop, Wall Street benchmarks are up over 1.0% each whereas the US 10-yeaR Treasury yields also regain the 0.90% mark.
Moving on, all eyes will be on the US Federal Reserve’s (Fed) final meeting of 2020. However, key data like UK inflation, PMI and European PMI, not to forget the US Retail Sales, can entertain the market players ahead of the Fed. Although the Fed isn’t expected to alter its monetary policy, any surprises can’t be ruled out and the same will fuel the market moves.
Read: Federal Reserve Preview: How a dose of economic Christmas cheer could spoil the market mood
Technical analysis
Gold buyers attack a five-week-old resistance line with a clear break above 21-day SMA for the first time in a week. Also acting as an upside barrier is the falling trend line from November 16, at $1,867. Meanwhile, a pullback can eye retest of 21-day SMA, currently around $1,836.
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