Spot gold rebounded in early Asian trading on Tuesday, just past the $1,880 mark. New news on U.S. fiscal stimulus has encouraged gold bulls.
The US House of Representatives on Monday night passed a bill that would increase the new Crown bail-out benefit for those earning less than $75,000 a year from $600 to $2,000. The bill passed the House by 275 votes to 134 votes against. The next step in the bill requires a two-thirds majority in the Senate.
US President Donald Trump signed into law a $2.3 trillion COVID-19 bailout and federal government comprehensive spending package on December 27, which includes $900 billion in COVID-19 bailout funds and $1.4 trillion in government spending.
Gold’s rally from $1,871 an ounce continued on the back of optimism sparked by news of the NOVEL Coronavirus bailout, FXStreet analyst Anil Panchal wrote on Tuesday. The House of Representatives passed a bill to support a $2,000 check.
Panchal said republicans could block passage of the bill when it goes to the Senate on Tuesday, citing an expected increase in the budget deficit.
Senate Minority Leader Chuck Schumer said on Monday: “Every Democratic senator supports the bill, but unfortunately the Republicans are not on our side.”
Going forward, Panchal said, in the absence of major data/events, the Senate’s performance on the U.S. stimulus plan will be key to short-term market direction.
On a technical basis, Panchal said gold will still target $1,900 an ounce unless the day closes below its uptrend level of $1,878 since November 30.
In terms of key points, Panchal expects $1,861.82, $1,850.06 and $1,830.79 to provide intraday support. $1,892.85, $1,912.12 and $1,923.88 would be intraday resistance.
At 09:40 Hong Kong time, spot gold was trading at $1,880.69 an ounce.