Gold drops from two-week high on US fiscal stimulus, vaccine news
· Gold declined from near its highest level in two weeks as investors weighed vaccine rollouts amid surging coronavirus infections in some parts of the world against fresh hopes for a stimulus deal in the US.
· Treasury Secretary Steven Mnuchin said he presented a new $916 billion Covid-19 relief proposal to House Speaker Nancy Pelosi, in the first move by the Trump administration since Election Day to break a months-long standoff. Still, time is running short on passing a bill before Congress’ year-end break, with cases in the US surpassing 15 million.
· Vaccine rollouts are being closely followed as infections surge in some parts of the world. US regulators gave early indications they may grant emergency-use authorisation to Pfizer’s vaccine, calling the shot highly effective with no safety issues.
· Britain became the first country to start administering the vaccine to its population, kicking off the western world’s Covid immunisation campaign.
· While vaccine developments have curbed demand for havens, bullion is still heading for the biggest annual gain in a decade amid the unprecedented amounts of stimulus used to cushion economies from the pandemic’s impact.
· Global central banks are embarking on fresh waves of bond-buying, with the European Central Bank expected to increase its own purchase plans when it meets on Thursday.
· “With the US elections over and the advent of vaccines, central bankers may re-evaluate their policies vis-à-vis the effects of mass inoculations” and stimulus with less urgency, said Avtar Sandu, a senior manager for commodities at Phillip Futures. Ultra-low yields and negative real interest rates are however expected to remain, and this should provide support for gold in the long term, he said.
· Spot gold declined 0.7 per cent to $1,856.99 an ounce at 12.22pm in Singapore, after climbing to $1,875.39 on Tuesday, the highest intraday level since November 23. Silver dropped 1.1 per cent, platinum was little changed, and palladium slipped 0.1 per cent. The Bloomberg Dollar Spot Index fell 0.2 per cent.
· Gold Price Analysis: XAU/USD refreshes intraday low, further downside eyes $1,850 – Confluence Detector
Gold bears the burden of the global rush to equities while standing on the slippery ground near $1,857, down 0.75% intraday, ahead of Wednesday’s European session.
Although record-high coronavirus (COVID-19) cases and the death toll from the US joins Brexit worries and the US-China tussle to challenge the market sentiment, hopes that the American covid stimulus is on the way favor stocks. Also on the positive side could be expectations that the vaccine developments will soon tame the global pandemic.
Meanwhile, fears of the hard Brexit and the first contraction in the Chinese Consumer Price Index (CPI) since late-2009 fails to recall the bears.
While portraying the market mood, stocks in Asia-Pacific and the futures are also positive whereas the US 10-year Treasury yields rise 2.5 basis points to 0.93% by press time.
Gold: Key levels to watch
Failures to cross the $1,870 upside barrier, comprising SMA 10 on one hour (1H), SMA 50 on 15M and Pivot Point one-week (W1) Resistance 1, portrays underlying weakness in gold prices.
However, SMA 5 on one day (1D) and SMA 100 on 1H together offer strong support around $1,850 to break for the gold sellers.
Should the bears manage to conquer the $1,850 support, Fibonacci 38.2% on one-month (1M), around $1,843, can return to the charts.
Meanwhile, Fibonacci 61.8% one-day, SMA 200 on four-hour (4H) and the middle band of Bollinger on the 1H and 15-minute play, around $1,866/67, can offer immediate resistance during the bullion’s fresh upside targeting $1,870 hurdle.
It should also be noted that the clear break above $1,870 can direct gold buyers toward the mid-November highs near the $1,900 threshold.
Reference: Thenationalnews, FXStreet
Thai
Eng