Gold Breaks Into Bull Run Following Bipartisan Stimulus Agreement in the US

Azeez Mustapha
2 December 2020 | Updated: 2 December 2020

Gold (XAU/USD) traded higher on Wednesday for the second consecutive session as investors picked up on the positive sentiment induced by the recent passing of a US fiscal stimulus package. However, a follow-through bullish surge got impeded by the U.K.’s authorization of the Pfizer COVID-19 vaccine for public use.

The recent weakness in the US dollar (DXY) was also a crucial bolstering factor for the dollar-denominated commodity. The dollar weakness got sponsored by the release of the US ISM figures, which painted a disappointing picture for recovery in the US economy. However, the greenback appears to be recuperating from its decline, capping further gains for gold.

Meanwhile, the precious metal got a significant boost from the resumption of stimulus talks between US Treasury Secretary Steve Mnuchin and House of Representatives Speaker Nancy Pelosi yesterday.

The proposed $908 billion relief bill is projected to last from its release date through March 31, 2021. Hotels, restaurants, and other small businesses are budgeted to receive $228 billion in additional paycheck protection.

There has always been the anticipation of a massive selloff in the dollar and a stock up in gold on the news of a mutual agreement on a bipartisan stimulus deal, which is what we are witnessing playout.

Nonetheless, investors are avoiding aggressive bets on gold ahead of the Nonfarm Payrolls data release on Friday.

XAUUSD – Hourly Chart

Gold (XAU) Value Forecast — December 2

XAU/USD Major Bias: Bullish

Supply Levels: $1830, $1849, and $1865

Demand Levels: $1815, $1800, and $1792

Just as we predicted in a previous analysis, gold has regained its bullish momentum, following a decisive break above the $1800 psychological line. At press time, the precious metal is locked in a battle with the $1830 resistance, as speculators anticipate further dollar weakness.

A failure to break the $1830 resistance in the coming hours could precipitate a fall to the $1815 support in the coming hours.

Note: Learn2.Trade is not a financial advisor. Do your research before investing your funds in any financial asset or presented product or event. We are not responsible for your investing results.

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Azeez Mustapha

Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.