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Gold rises to over 1-week high on sagging dollar

 

·         Gold rose to an over one-week high on Thursday as the dollar weakened on hopes of coronavirus vaccine rollouts, while investors also weighed the possibility of more U.S. stimulus.

 

·         Spot gold rose 0.2% to $1,835.37 per ounce by 0402 GMT. U.S. gold futures were up 0.5% at $1,838.60.

 

·         Optimism over a stimulus deal and vaccine progress favored riskier assets and pushed the U.S. dollar to a near 2-1/2-year low.

 

·         Congressional Republicans and Democrats were unable to agree on a fresh coronavirus relief package, though early signs indicate that a $908 billion bipartisan proposal could be gaining traction as a negotiating tool.

 

·         Stimulus talks, especially over a bipartisan agreement, will support gold in the short term as it would weaken the U.S. dollar, said Michael Langford, executive director at corporate advisory and consultancy firm AirGuide.

 

·         Positivity over a Covid-19 vaccine could have limited impact on bullion going forward as much of that optimism is priced in by markets, he added.

 

·         Health experts in the United States welcomed Britain’s emergency approval of Pfizer Inc’s vaccine, in a sign that U.S. regulators may soon follow suit.

 

·         “The key drivers of gold, real interest rates and the dollar, are expected to remain soft without concrete economic progress worldwide or an effective vaccine readily available to the masses,” Avtar Sandu, senior commodities manager at Phillip Futures, said in a note.

 

·         Gold is seen as a hedge against inflation likely to result from large stimulus measures.

 

·         Gold Price Analysis: XAU/USD breaches bearish trendline, trades near $1,830

 

Trend: Bullish

 

Gold jumped 0.83% to $1,830 on Wednesday, violating the trendline falling from Nov. 9 and Nov. 23 highs.

 

The breakout has strengthened the case for a re-test of the former support-turned-resistance of $1,850 put forward Tuesday's bullish marubozu candle.

A convincing move above $1,850 would expose the downward trending 50-day Simple Moving Average (SMA), currently at $1,880. On the downside, the 10-day SMA at $1,816 is the level to beat for the bears. A violation there would expose the recent low of $1,764.

 

The metal is currently trading largely unchanged on the day at $1,828 per ounce.

 

·         Deutsche Bank is bearish on gold — sees prices falling more than 12% in the near term

 

·         Silver fell 0.3% to $24.02 an ounce, while platinum dropped 0.3% to $1,011.47 and palladium was up 0.2% at $2,404.18.

 

Reference: CNBC, FXStreet