Gold Rises Amid Renewed Hopes of Additional Stimulus

Gold (XAU/USD) traded on an upbeat momentum in the early European session and renewed its daily high around $1923, although it lacked any follow-through strength.

The yellow metal has now traded on a bullish momentum for the third consecutive session on Wednesday. The current bearish bias surrounding the US dollar (DXY) was seen as the major factor bolstering the dollar-denominated commodity.

Meanwhile, President Donald Trump has stoked hopes for the possibility of additional stimulus and has assured that he is willing to approve a large stimulus bill, despite that being the opposing stance of the Republican party. The House of Representative Speaker Nancy Pelosi has said that the bill would be accepted by Congress.

The renewed possibility of a US fiscal stimulus before the November election ignited a sell-off in US bonds, pushing the yield on the 10-year bond to 4-month record levels. The absence of demand for bonds, consequently, extended serious pressure on the greenback.

Finally, investors remain worried about the effects of a second wave of Coronavirus infection on the global economic recovery. These worries will continue to bolster the non-yielding commodity in the near-term.

Gold (XAU) Value Forecast — October 21

XAU/USD Major Bias: Bullish

Supply Levels: $1923, $1933, and $1940

Demand Levels: $1900, $1889, and $1876

Gold retains its bullish stance into the trading of Wednesday and will likely take on higher resistance levels. At press time, the commodity is trading at $1918, after seeing a mild rejection from the $1923 key resistance. We could see another retest and a possible break of this level in the coming hours.

Meanwhile, XAU/USD is still trading well within our ascending channel and has a new base at $1910. That said, any declines from this level will be strongly supported by this line, where many dip-buyers are likely to come onboard.

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