Today in the early trading session, the yellow metal prices maintained its previous day's record high recovering rally and traded above $1,960 level as the bullion buyer has many things to cheer on the day. However, the renewed uncertainty surrounding the U.S. fiscal package, triggered by the differences between U.S. Senate members as well as coronavirus (COVID-19) tensions and market expectations of dovish comments from the U.S. Federal Reserve (Fed) Chairman Jerome Powell, weighed on the market trading sentiment, which underpinned the yellow metal's perceived safe-haven status.
On the other hand, the broad-based U.S. dollar weakness in the wake of the U.S. coronavirus crisis also added strength to the yellow-metal upside momentum. Gold prices hit the record high to $1,981.34 marks in the previous day, supported by the concerns about worsening US-China relations and increasing the number of coronavirus cases. At the moment, the yellow metal prices are currently trading at 1,959.22 and consolidating in the range between 1,948.02 and 1,964.26. However, the bullion traders seem cautious to place any strong position ahead of the U.S. Fed meeting.
The downbeat trading sentiment could be attributed to the lack of progress in the U.S. policymakers' discussions over the much-awaited fiscal package. The House Speaker Nancy Pelosi and the White House Chief of Staff Mark Meadows recently poured cold water on the face of expectations that the U.S. policymakers will soon deliver the much-awaited fiscal package while indicated the difference between the Republicans and Democrats as the main reason behind the lack of progress over the much-awaited stimulus. In simple words, the U.S. policymakers still have variations in phase 4 COVID-19 bill despite the upcoming expiration of unemployment claim benefits.
However, the downbeat trading sentiment in the equity market was further bolstered by the fears of COVID-19 cases in the U.S., which fueled worries that the economic recovery in the U.S. could be stopped in the wake of the resurgence in coronavirus cases. As per the latest report, the number of confirmed coronavirus cases in the Arizona state increased by 2,107 to a total of 165,934 so far while the death toll increased by 104 to 3,408 and the current hospitalization dropped by 62 to 2,564.
Apart from this state, the number of confirmed coronavirus cases in the Florida state rose by 9,230 to a total of 441,977, while the deaths toll rose by 191 to 6,240, and the hospitalization decreased by 75 to 9,023 according to Florida's Department of Health statement. However, these fears have exerted significant pressure on the market trading sentiment and provided support to the yellow-metal prices to hit the records high.
Considering the worst coronavirus situation, the United States President Donald Trump tried very hard to revive vaccine hopes while saying that the Historic agreement was reached with Kodak to produce critical pharmaceuticals, but it seems that traders did not give any major heed to it, at least for now. In the meantime, the Fed also played their key role while extending expiries of the previously announced stimulus measures. Despite all these, virus worries still dominated the market as the global numbers crossed-16.00 million.
As a result, the broad-based U.S. dollar reporting losses on the day as the United States still facing virus woes and struggled to control a spike in coronavirus cases eventually ruins hopes for a quick economic recovery. However, the losses in the U.S. dollar helped the gold prices to stay higher as the price of gold is inversely related to the price of the U.S. dollar. Whereas, the dollar index against six major currencies stood at 93.720 (DXY), near its lowest since June 2018 this week.
Besides this, the yellow-metal prices took an additional strength from the rising tensions between the United States and China. Conceding US-China relations' current position, both the two countries could be headed for a total collapse of relations and outright conflict within the next few months. It is worth recalling that Mike Pompeo called for an end of the "engagement" policy that has defined the two countries' relations for decades. As in result, most of the analysts expect that these intensifying tensions will also damage the trade that exists between the two countries. Thus, the precious metal gold is facing strong bullish bias amid increased safe-haven appeal in the market.
Daily Support and Resistance
Pivot Point 1942.61
Gold rose distinctly to place a new high encompassing 1,988 mark and sank suddenly right after, and now it's trading at 1,956 mark. Gold may gain next support at 1,930 level now, and bearish crossover beneath this level can lead its prices towards 1,914 mark. The precious metal gold will continue to trade higher, and it may find next resistance around 1,981 level. The 23.6% Fibo retracement support stays at 1,937, and 1,910 will be working as a 38.2% Fibonacci support. Bullish bias seems dominant above 1,935 and bearish below 1,967 level. Good luck!