International spot gold on Wednesday (December 2) continued to rebound, hitting a peak of $1832.52 / ounce, temporarily stabilized above its 200-day moving average, and has resumed the downward path since the beginning of August, the bulls hope to organize a more effective offensive. Recent expressions of concern about the epidemic by Federal Reserve Chairman Colin Powell have provided positive support for gold, but the rejection of a nearly trillion-dollar stimulus package proposed by senators from both parties has put the inflation risk back on hold. So in the long and short factors, gold may remain trapped in a narrow range of volatility for the time being.
The analysis thinks, this week is what gold has showed traders expect gold will continue to be volatile in the near future, and the ups and downs have a space in which to stimulus bill’s bullish news is short squeeze, and attract buyers, and vaccine to keep pressure on prices, because the success of the vaccine may speed up the recovery and reduce the need of further fiscal and monetary stimulus.
A bipartisan group of senators has proposed a $908 billion economic stimulus package in an effort to break a months-long impasse, according to people familiar with the matter. Without fiscal stimulus, the US economy risks slipping back into contraction. But neither Republican nor Democratic leaders have endorsed the plan. President-elect Biden has so far supported the position of House Speaker Nancy Pelosi and pushed for a $2.4 trillion bill. The proposal was also blocked by Senate Majority Leader Mitch McConnell, who supports a roughly $500 billion package.
Separately, White House Press Secretary Jim McNerney said a bipartisan $908 billion economic stimulus package in the Senate was not part of the fiscal stimulus negotiations between the White House and congressional leaders.
On the economic front, U.S. ADP payrolls rose 307,000 in November against a forecast of 410,000, after being revised to 404,000 from 365,000. The pace of job growth continues to slow. But job growth across all sectors and sizes remained positive in November. Analysts said the ADP report came in weaker than expected, leaving a potential downside risk to Friday’s nonfarm report. But while there was some slight risk aversion, the overall market reaction to the report was muted.
In technical terms, on the daily chart, the gold rally on Tuesday returned to above 1800, reversing the bearish outlook below that level and opening up room for a rebound correction. The day is a further rebound up the initial resistance to 1837, further resistance to 1850-1860 area. If the short term downward, 1820 and 1800 levels have been converted into support.
However, market analysts said the 50 per cent Fibre-retracting level of 1,763.5 appeared to halt the recent sell-off and provide a “springboard” for this week’s rally. However, it remains to be seen whether the level can continue to hold if it is tested again, especially in the context of oversold ranges.
In a recent report, analysts from ANG Traders said they expect gold to rise to $1,900 as it rebounds from key support levels around $1,770, a 50 percent retreat from its March low to its August record high. While gold still has room to rise in the near term, ANG said the medium-term outlook looks less bright and the biggest risk remains the DOLLAR.
“Gold and the dollar are behaving similarly to 2000; The dollar is trading at the lower end of its range, while gold is at a high. In the medium term, a stronger dollar, as it did in 2000, is likely to push gold lower for a few months until better economic growth, renewed inflation expectations and a return to a bear market for the dollar and a bull market for gold.”
“We are seeing a return to the $1,800 / oz level and a lot of that has to do with the weaker dollar trade,” said Edward Moya, senior market analyst at OANDA. “The unwinding of the gold trade is over and we are likely to see more action from congress to support the economy.”