- Gold Prices (XAU/USD) give away $20
- US Senate unveils another stimulus package
- US dollar index is up 0.30%
Gold prices (XAU/USD) continued to give away most of the gains racked in the past several weeks on a strong US dollar. The yellow metal gave away more than $20 in the last session dropping from $1695 levels to around $1671 levels after the US Senate unveiled another stimulus program to help the economy.
Gold prices drop on strong dollar
The COVID-19 pandemic has affected the global economy and pushed it to the brink of a recession. However, the recent strengthening of the US dollar and an increase in demand for the safe-haven to cover for losses could be the reason for the downward trend witnessed. Currently, the US Dollar index is up 0.30% to a fresh three day high of 100.27.
It is expected that gold prices could consolidate around the recent highs this year going to next year. This is because of a surge in demand for the precious metal to counterbalance the strengthening dollar. Usually gold is a hedge against a decline in consumer spending or inflation but in deflation situations, the buying power of the dollar strengthens.
The prices of gold have formed a tight range of between $1673.90 and $1724.40. Although the upward trend has been taken to the downside, an urge to take profits has been slowed relative to the current high prices. However, the absence of conviction in a more direct uptrend is surprising considering there have been growing concerns on the possibility of a recession. Bank of America is upbeat on the price of gold and has upgraded its forecast for the next eighteen months to around $3,000/oz.
Pivot : $1679.89
Technical View : Long position above $1688.79.
Target : $1697.70
Technical View : Short position below $1670.96.
Target : $1662.04
Comments : Currently gold is under buying pressure as investors turn to the haven to cover their losses
Last Price : $1683.46