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- Gold cuts early losses for the week amid cautious markets.
- US policy makers seek interim funding for immediate relief while they stay ready with the stimulus plan.
- The Brexit deal is less likely in 2020 amid the outbreak of a new variant of covid in the UK.
- S&P 500 futures break their four-day winning streak, eyeing macro for fresh momentum.
Gold prices hover around $ 1,885, following the $ 5 move at the beginning of the week, during the Asian session on Monday. Although Brexit woes and new variant coronavirus (COVID-19) fears weighed on gold early in Asian trading, hopes for US covid stimulus favor commodity bulls. However, traders have recently become cautious ahead of the official verdict on Brexit and US fiscal stimulus, which in turn keeps the precious metal in a tight range.
The risks remain serious …
While members of the U.S. Congress likely endorsed interim short-term funding, while agreeing to the long-awaited aid package of around $ 900 billion, House Speaker Nancy Pelosi, and Treasury Secretary Steve Mnuchin, have yet to make an official announcement. On the other hand, House Majority Leader Mitch McConnell tweets: “As the American people continue to fight coronavirus this holiday season, you will not be alone. Congress has just reached an agreement. We will pass another rescue package as soon as possible. More help is on the way. “
Speaking about Brexit, the chairman of the EU Foreign Affairs Committee, David Callister, mentioned in a tweet that the European Parliament will not be in a position to grant consent for a deal this year. The European Union (EU) and the UK have disagreed on fishing and a level playing field according to the latest market comments.
Aside from the American aid package and Brexit, the recent outbreak of the covid variant in the UK is also the key factor. London and South East England are under Level 4 lockdown due to the declared virus, while the Netherlands and Australia also had one case each. To prevent the pandemic from spreading, European countries, including France and Italy, are joining Turkey in suspending travel to the UK.
Against this backdrop, S&P 500 futures are down 0.36% to 3,703, while antipodes and commodities are lower at the time of writing.
Looking ahead, metals traders will keep their eyes on the macro for some new momentum. While the announcement of a stimulus deal may help gold buyers, fears of a no-deal Brexit and a virus outbreak are probing the commodity’s rise.
Technical analysis
Although a clear break to the upside of the 50-day SMA, at $ 1,870 now, holds hope for gold buyers, the mid-November peak surrounding the $ 1,900 threshold and the 100-day SMA near $ 1,903 protects the immediate rise of the yellow metal. Meanwhile, an ascending trend line from November 30, at $ 1,852, adds to the support on the downside.
