This week is shaping up pretty well for gold buyers. The XAU / USD pair has added about $ 50 in the last three alone, recovering to $ 1875 an ounce. Gold gets the maximum benefit from a weakening dollar, declining real yields on US bonds, and rising inflationary risks amid soft global monetary policy.
Expectations of new stimulus in the US have provided significant support to gold in recent days. Negotiators in Congress are close to agreeing on a nearly $ 900 billion bailout package that will include a second round of direct citizen benefits and unemployment benefits. According to Republican Senator John Thune (from South Dakota), direct payments to citizens will be $ 600, and weekly unemployment benefits will be $ 300 higher until March.
It is planned to allocate $ 325 billion to support small businesses, of which $ 257 billion will go to the salary preservation program. According to Senate Majority Leader Mitch McConnell, the project could gain support in both chambers of the legislature. A similar position was also expressed by the head of the democratic minority in the Senate, Chuck Schumer. Moreover, Schumer noted that the Democrats will seek a more significant package of state aid next year after the inauguration of US President-elect Joseph Biden.
It should be noted that the new stimulus from the American authorities remains the main driver of inflationary expectations in the United States. Market participants are betting on gold, since only this asset is a history-proven insurance against depreciation of the national currency. Many experts predict that the dollar will remain under pressure throughout 2021 and risk losing at least 10% of its value. In this scenario, the decision of investors to “shift” part of the capital into non-inflationary gold looks more than reasonable. With that said, the bullish rally in XAU / USD is more likely to continue with the aim of consolidating the pair above $ 1900. How quickly gold will reach this mark depends on how soon the US Congress approves a new package of fiscal support for the US economy.
XAU / USD BuyLimit $ 1860 TP $ 1900 SL $ 1848
Analytical reviews and comments to them reflect the subjective opinion of the authors and are not a recommendation for trading. Author Artem Deev is a trader analyst at AMarkets . The social network of forex traders is not responsible for possible losses in case of using the review materials
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