Spot gold rallied sharply in Asian trading on Monday as the metal neared the $1,900 billion an ounce mark and bulls were cheered by news of a new $900 billion U.S. stimulus deal. In the foreign exchange market, sterling/USD plunged below 1.3400 after a novel Coronavirus new variety showed a 70% increase in infectiousness, a drop of over 150 points on the day.
Us lawmakers have reached an agreement on a $900 billion COVID-19 bailout bill to fund the government and provide long-term COVID-19 assistance, Senate Majority Leader Mitch McConnell announced On Monday. It is also the second-largest stimulus deal in US history, after the $2.2tn in March.
The measures will include a new round of small business assistance through the Payroll Protection Program (PPP), $300 weekly unemployment benefits, $600 stimulus payments for each American adult and child, and more funds for school novel Coronavirus detection and vaccine distribution, it said.
Positive developments on fiscal stimulus helped boost demand for gold, which hit an intraday high of $1,899.11 an ounce. Gold, seen as a hedge against inflation and currency depreciation, has risen more than 20% so far this year on the back of unprecedented global stimulus measures.
The legislative text is still being written and, once it is completed, will be put to a vote in the House of Representatives, which is expected to vote on Monday. The Senate will then vote, which will then be sent to President Trump for his signature.
Jeffrey Sica, founder of Circle Alternative Investments, said: “Once the stimulus package is fully approved, I would expect gold prices to rise sharply because it is a massive stimulus package.”
Eamoon, an analyst at Forexlive, said two key factors driving gold prices higher in Asia today were the COVID-19 stimulus deal in the United States and the worsening COVID-19 outbreak in the United Kingdom and the closure of London.
The bullish argument will remain valid as long as gold stays above $1,875.00 an ounce, according to Economies.com, a leading financial website. From the 4-hour chart, the random indicator hits oversold territory and the EMA 50 continues to support gold.
With the outlook for gold prices continuing to be bullish, the first target is $1,917.00 an ounce, and should it break above that level it could extend its rally to $1,928.60, According to Economies.com.
Peter Hug, head of global trading at Kitco Metals, said gold’s target of hitting $1,925 by Christmas was still within reach.
Until the global economy begins to normalize in the third quarter of next year, Hug believes the outlook for gold remains very constructive. “From a fiscal and central bank point of view, they are going to keep easing, which is going to inflate the deficit and hurt the dollar,” he said. In that case, you have to be constructive with precious metals.”
Charlie Nedoss, senior market strategist at LaSalle Futures Group in New York, highlighted $1,914 an ounce as a strong resistance level this week.
Sentiment in the gold market remains extremely bullish, according to a Weekly gold survey released Friday by Kitco News. Fourteen analysts responded to the survey last week. A total of 11 analysts (79%) think gold will rise this week; Meanwhile, two analysts (14%) are neutral on gold; Only one analyst (7 per cent) expects gold to fall this week.
Ole Hansen, head of commodity strategy at Saxo Bank, said: “We are likely to see some wild swings in the next few weeks, but the bullish fundamentals for gold remain. “The factors driving gold higher in 2020 will not disappear in 2021.”
Daniel Pavilonis, senior commodity broker at RJO Futures, said investors will turn to gold as a hedge against rising inflation in 2021 as further stimulus measures and a weak dollar affect consumer prices.
Richard Baker, editor of the Eureka miners report, said he was bullish on gold in the near term, although investors remained optimistic that the launch of the COVID-19 vaccine would bring fresh economic growth.
Baker noted that even if people start getting vaccinated, economic recovery still has a long way to go. “Signs of weakness in the U.S. manufacturing sector and a surge in jobless claims suggest the road to a strong recovery will remain bumpy in the months ahead,” he said.
The pound plunged more than 150 points as London was forced to close and European Union countries imposed restrictions on travel between Britain and the rest of the world
Sterling fell sharply against the dollar on news of the COVID-19 outbreak in the UK, hitting as low as 1.3368 in Early Asian trading and tumbling more than 150 points on the day. The British government announced over the weekend that parts of the capital, including London, would be upgraded to a new level 4 for two weeks. Novel Coronavirus’s new variety of novel Coronavirus has prompted many countries to close their borders and cancel flights to and from the UK. So far, at least 11 countries have taken action.
Currently, 265 people per 100,000 people in the UK have been diagnosed with COVID-19. The novel Coronavirus is related to the novel coronavirus. The number of confirmed cases in the UK has soared in the past two weeks thanks to a new variant from novel Coronavirus, which scientists believe is 70 per cent more contagious than the original strain, Prime Minister Johnson said on Monday. The most urgent task now is to ensure that the new variant does not lead to a higher death rate.
The government’s scientific adviser had previously said the mutation was the main reason for the surge in hospital admissions in December. Johnson also stressed that there is no evidence that the mutated virus is more lethal or that the COVID-19 vaccine is less effective against the mutated virus.
On December 19 local time, The British Health Secretary Hancock said that the Novel Coronavirus new strain found in the UK had got out of control and the British government must take control of it and have the responsibility to take action.
At a press conference on December 19, British Prime Minister Boris Johnson said that London, southeast and East England would be raised from the current level 3 to level 4 for two weeks from December 20, in response to measures similar to the widespread “foot restraints” that England put in place in November. Places such as London will be closed again, and other areas will be further tightened.
According to the previous guidelines issued by the UK government, the three levels of COVID-19 alert system, one to three, correspond to “medium”, “high” and “very high” alert levels and corresponding containment measures. The British government has decided to add a fourth phase because of the pandemic.
Under the four-level prevention and control level, people should stay at home as much as possible, except for a few cases such as buying daily necessities. “Non-essential” retail stores, entertainment facilities, fitness centers, etc., are closed; People should work from home whenever possible; People are not allowed to move in and out of areas where level 4 prevention and control measures are in place. In addition, people are not allowed to gather with people other than their families during Christmas except for special reasons.
According to European media reports, the governments of Germany, France, Ireland, Belgium, the Netherlands, Italy, Austria, Luxembourg and other countries have announced emergency restrictions on the entry of British passengers in order to prevent the spread of the epidemic. The restrictions include cutting flights to and from Britain.
France has banned flights, trains and ferries from the UK for 48 hours from midnight on December 20, transport Minister Jean-Baptiste Jebali announced. The Federal Government of Germany announced on 20 December that due to the novel Coronavirus mutation in the UK, flights from the United Kingdom will be temporarily banned from 21 To 31 December. Germany will also convene eu member states to coordinate the novel Coronavirus mutation issue on 21st.
In addition, The Netherlands has banned all flights from the UK from landing at its airports from 6am local time on December 20 until January 1, 2021. Belgium banned flights from Britain from midnight Sunday for at least 24 hours.
On 19 December local time, WHO said it was in close contact with UK officials regarding a novel Coronavirus new variant that has emerged in the country.
According to the website of La Repubblica of Italy on 20 December, the Ministry of Health has announced that the Ceglio Military Medical School, in collaboration with the Italian Institute of Higher Health, has extracted from a sample of a confirmed COVID-19 case the gene of the novel Coronavirus new variant recently discovered in the UK.