News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • $USDCAD, $AUDUSD Near-term Technical Setups - https://t.co/HOOdZz6IIF https://t.co/DRiqmlKXHg
  • Commodities Update: As of 19:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: -0.11% Gold: -0.91% Silver: -3.20% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/u41nMRKgOj
  • A pretty clean break from $SPX and other risk-sensitive assets are following along. As Hans Landa said in Inglorious Basterds: "Ooooooo. That's a Bingo" https://t.co/fLqS3kL8li
  • US Dollar Index reaches a multi-month high as markets strike a risk-off tone $USD $DXY https://t.co/m8AdjHztFX
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 93.13%, while traders in GBP/JPY are at opposite extremes with 70.14%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/GgwsfrU5lz
  • EUR/USD sheds 40-pips in a matter of minutes as the US Dollar strengthens broadly. Get your $EURUSD market update from @RichDvorakFX here:https://t.co/wIlo9Tbp7A https://t.co/It5iIFhMmL
  • Well, I don't think Powell will temper interest/concern around central banks having to pullback in the foreseeable future. Both 'taper tantrum' and 'operation twist' search interest charging higher: https://t.co/NK17S328F3
  • Indices Update: As of 19:00, these are your best and worst performers based on the London trading schedule: Germany 30: -0.86% FTSE 100: -1.20% France 40: -1.27% Wall Street: -2.32% US 500: -2.53% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/KjNr7ongtX
  • Nasdaq now down over 3% today, confirming 10% correction territory. $QQQ
  • $USDCHF has continued to strength today, now above the 0.9280 level, trading around the highs hit in late September. The pair has performed strongly since mid February as US rates have continued higher, rising from 0.8900 by nearly 400 pips to its current levels. $USD $CHF https://t.co/qrHY8Sy2sf
Gold Prices Edge Higher After Trump Rejects the US Stimulus Package

Gold Prices Edge Higher After Trump Rejects the US Stimulus Package

Margaret Yang, CFA, Strategist

GOLD PRICE OUTLOOK:

  • President Trump refused to sign a US$ 900 billion stimulus package approved by US Congress
  • Gold prices rebounded from the 50-Day Simple Moving Average (SMA) line after the news
  • A potential wider spread of the new coronavirus strain threatens further lockdown and travel bans
Advertisement

Gold prices edged higher on Wednesday amid a new round of pandemic concerns that raised the prospects for further easing and stimulus hopes. Meanwhile, President Trump unexpectedly rejected a US$ 900 billion stimulus package that was approved by the US Congress after months’ of negotiations. The abrupt move led to heightened uncertainty and souring sentiment ahead of the holiday season.

The potential for wider spread of a new coronavirus strain found in the UK, which is reportedly a lot more transmissible than the original, may lead to stricter lockdown measures and prolonged travel bans until new vaccines are developed and become widely available. That said, the emerging of virus mutations may derail a seemingly smooth recovery trajectory, pointing to further need for stimulus and monetary easing - a direct boom for precious metals. According to Bloomberg, the new Covid-19 strain is possibly already in the US, Germany, France and Switzerland.

Forex for Beginners
Forex for Beginners
Recommended by Margaret Yang, CFA
How can central banks impact markets?
Get My Guide

More encouragingly, capital outflow from the world’s largest gold ETF - SPDR Gold Trust (GLD)appears to have slowed in the past week. The number of shares outstanding for the ETF has reduced by an amount of 0.9 million, compared to 3.3 million in the week before. Yet it still marks a tenth consecutive weekly outflow (chart below). This suggests that the pace of redemption has slowed, reflecting a pickup in demand for goldamong ETF investors.

The number of GLD shares outstanding has fallen from a recent peak of 437.8 million on September 21st to 400.1 million lately, marking a 8.6% decline. Gold prices and the number of outstanding GLD shares have exhibited a strong positive correlation of 0.95 over the past 12 months (chart below).

Gold Prices vs. GLD ETF Shares Outstanding

Gold Prices Edge Higher After Trump Rejects the US Stimulus Package

Source: Bloomberg, DailyFX

Technically, gold prices have likely broken above a “Descending Channel” that formed since early August (chart below). Prices have since pulled back to test the ceiling of the channel, which is now at around US$ 1,850. If this support level fails to hold, price may fall back to the “Descending Channel” and the downward trajectory may continue.

Since the start of December, gold prices are attempting to form higher highs and higher lows. This is an encouraging signal for traders who are holding a bullish view on gold. If prices clear above recent high of US$ 1,890 and aim higher, this may signal a medium-term trend reversal.

Immediate support and resistance levels can be found at US$ 1,860 (the 50-Day SMA) and US$ 1,890 (100-Day SMA) respectively.

Gold PriceDaily Chart

Gold Prices Edge Higher After Trump Rejects the US Stimulus Package
Gold BEARISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 2% -11% 0%
Weekly 3% -8% 1%
What does it mean for price action?
Get My Guide

IG Client Sentiment indicates that retail gold traders are leaning heavily towards the long side, with 82% of positions net long, while 18% are net short. Traders have added long (+6%) while trimming short (-8%) positions overnight. Compared to a week ago, traders have increased long (+4%) bets while reducing short (-24%) exposure.

Building Confidence in Trading
Building Confidence in Trading
Recommended by Margaret Yang, CFA
Don’t give into despair, make a game plan
Get My Guide

--- Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Comments section below or @margaretyjy on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES