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

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.

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.

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