Gold prices fell for the second week in a row as optimism about covid-19 vaccine and uncertainty over US stimulus package dented global rates
The price of the precious metals edged lower as the domestic market resumed trading after the Tihar holidays In India. The price correction helped boost buying in India’s retail gold market this week, Reuters reported
On Friday, gold edged higher after US Treasury Secretary Steven Mnuchin indicated that negotiations on stimulus measures will carry on, boosting the metal’s appeal as a hedge against of likely inflation.
In addition, challenges to the soft Brexit, due to the differences over the key issues including fisheries, governance and competition rules, joins the doubt over the future of the Federal Reserve’s emergency lending program to weigh on risks. Moreover, US President Donald Trump’s exhausting efforts to stop the President-elect Joe Biden from reaching the White House also adds to the market’s lack of clarity and bitter the trading sentiment.
Nevertheless, global gold rates have dipped about 5% since positive reports on COVID-19 vaccines from Pfizer and Moderna in the past 12 days while at the same time the pandemic continues to rage in many areas around the globe, including the United States and parts of Europe.
Gold has mainly gained this year on the back of harmed economies from the pandemic and the resultant global stimulus. Gold is considered as a safe haven asset, inevitably shooting higher in times of uncertainty.
This week the yellow metal will be tested again as the long-term remains bearish as the optimism of an effective Covid-19 vaccine is rising. Pharma companies coming out with positive test results are pressuring Gold.
The pair has tested the support level of $1,850 two times this month, and it is trading below the two EMAs as an indication that the bears are prevailing.
The long-term outlook of the pair remains bearish, with a possible rebound at about the 1900 resistance line only to go down testing the 1800 support line.
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