- Gold prices ease from the day’s high while keeping bounce off $1,859.
- US President Donald Trump obstructs covid stimulus, government funding, US House Speaker Pelosi shows readiness for a change.
- Brexit deadlock, virus woes add to the risk aversion wave.
Gold recedes from intraday top of $1,867.60 to $1,865.40 amid fresh chatters over the US coronavirus (COVID-19) aid package and government spending during early Wednesday. In doing so, the yellow metal marks 0.20% intraday gains, the first positive move since last Thursday.
Following US President Trump’s threat to use a veto over the recently passed covid stimulus and government funding of around $2.3 trillion, US House Speaker Pelosi said, “Democrats are ready to bring $2,000 direct checks to the floor this week by unanimous consent.”
This raises uncertainty over the much-awaited aid package that earlier got the US Congress back-up and propels the US dollar, while also weighing on the gold prices. However, challenges to the risks, mainly emanating from Brexit and UK’s virus conditions are likely to keep the US dollar on the bids due to its risk-safety nature.
As per the latest Brexit update, the EU considers accepting the UK’s fishing terms but has problems with details of €650m of quota rights. Market chatters suggest the deal could come as soon as Wednesday or the next or never.
Additionally, the Telegraph came out with the news suggesting further stringent activity restrictions in the UK, also including more areas, after December 26. The reason could be traced from the jump in virus infection as well as fears of a new variant of the covid.
Against this backdrop, S&P 500 Futures drop 0.40% while stocks in Asia-Pacific trade mixed by press time.
Moving on, the market player will clarity over the US stimulus as well as Brexit for a fresh risk-on mood and an extra strength to gold. In the absence of which, the commodity may remain pressured amid likely US dollar strength on the risk-off mood.
Technical analysis
Unless breaking $1,900, gold sellers can keep targeting a confluence of 21-day EMA and an upward sloping trend line from November 30, currently around $1,856.
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