Daily Market Recap - GOLD Fails to Maintain Bullish Momentum

Gold prices are trending lower on Tuesday as markets continue to assess the impact the new strain of coronavirus in the UK will have on the global economic recovery. Traders are also reacting to the long-awaited US fiscal stimulus package, though it failed to generate much upside on the yellow metal.

Gold looks set to settle down over 0.80 percent on the day, crossing just below the 1,861.77 per ounce support level at the time of writing. Some analysts have pointed out that todays move may also be partly due to some profit-taking behavior and year-end position squaring.

The announcement of the US fiscal stimulus deal is likely to have been already priced into the market given today‘s muted reaction. Furthermore, better than expected US economic data has also kept some pressure on gold’s upside. The US economy reached record growth with the third-quarter GDP reading coming in at 33.4 percent on an annualized basis.

Gold prices will likely remain rangebound between the 1,880 and 1,817.58 level in the short run as traders await to see the effects the Fed‘s monetary stimulus will have on the economy. Meanwhile, President-elect Joe Biden will take office on January 20th at which point talks of new stimulus may take center stage and lift gold’s prospects once again.

From a technical perspective, momentum in gold is shifting to neutral reading on the daily chart though a bullish rebound has not been entirely written off yet. The flight to the safe-haven US Dollar may lose steam should the covid-19 vaccine be found effective against the recent mutations in the UK.

The target for sellers will likely be the intersection of the 20-day MA and the downward sloping trendline from August highs. Should gold prices fail to hold above that point, we may experience a rapid acceleration to the downside, perhaps all the way to 1,800.

(Chart Source: Tradingview 22.12.2020)

On the flip side, a trade through 1,880 will resume the uptrend in the precious metal with the next likely target being the psychologically significant 1,900 per ounce mark as buyers still have room to push higher with the RSI standing firmly within the middle of the range.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.