Today in Asia, the price of gold slipped by 0.5%, but at the beginning of the European trading session, the precious metal began to recover. Uncertainty over Brexit, protracted inter-party negotiations in the United States, the COVID-19 pandemic and other risk factors are fueling demand for defensive assets.
Republicans and Democrats have declared their readiness to make concessions in order to adopt a new funding program by December 11 and prevent a government shutdown. Positive statements from both sides increase the likelihood of reaching an agreement before the deadline. Steven Mnuchin also tweeted that he provided House Speaker Nancy Pelosi with a new $ 916 billion COVID-19 response package. New stimulus measures may increase the pressure on USD due to the close inverse correlation.
On the other side of the Atlantic, negotiations are continuing on a trade agreement between the UK and the EU. On Tuesday evening, some news outlets reported that Michel Barnier was pessimistic about the likelihood of a trade agreement being concluded before December 31, 2020. He told EU representatives that Brexit without a trade agreement is now more likely. This is another strong support factor for gold.
The situation with the pandemic also remains in the spotlight of investors. Now the news coming to the market has a rather neutral effect on gold. On the one hand, investors are responding positively to reports of vaccinations in the UK and the imminent introduction of the vaccine in the US. On the other hand, reports of a continuing increase in the number of cases and tightening of quarantine measures in some US states, EU countries, South Korea and Hong Kong have a negative impact on investor sentiment.
After a correction to the 1857.00 area, gold resumed its upward movement. In the medium term, the initiative is still on the side of buyers. In the coming days, we can see a breakdown of resistance at 1870.00 and an increase in quotations to 1884.00.
The main scenario is growth to 1884.00.
An alternative scenario is a breakdown of the support at 1857.00 and a fall to 1830.00.
The current fundamental outlook is moderately positive. We consider longs with moderate risks from the level of 1857.00.
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