“Based on the optimism that the House and Senate had reached an agreement in regards to the revised bipartisan fiscal stimulus bill on Sunday, gold futures traded to an intraday high of $1912 overseas last night in London.”
However, at roughly 3:30 AM EST gold futures had already sold off from the intraday highs of $1912 and was trading just below $1900 before trading sharply lower. Over the next hour of trading, between 4:30 and 5:30, AM EST gold pricing dropped from $1897 to $1859 as news surfaced about concerns that the Covid-19 virus had mutated creating a new variant of the novel strain of coronavirus.
According to MarketWatch, “Worries about increased lockdown procedures in London and other parts of the world drove investors to the perceived safety of dollars and compelled some traders to momentarily sell some of their bullion holdings… Bullion has tended to slide, at least momentarily, as worries about the virus have caused broader selling in risk assets and prompted some flight to cash and out of precious metals.”
The article cited a research note on Monday written by Edward Moya, Senior market analyst at Oanda who said, “Today’s price action for gold reminded traders of the panic selling that occurred in March.”
The news of a new coronavirus mutation dampened the optimism that the House and Senate had finally reached an agreement. The $900 billion bipartisan aid bill was voted upon today and passed in both legislative branches. This took gold prices off of their intraday low, with the most active February 2020 Comex contract currently fixed at $1881.70, after factoring in today’s decline of $7.20. However, the current price is $30 below the highs achieved overseas.
This indicates that there is major technical resistance at $1911. The inability for gold to hold pricing above $1900 also suggests that there could be more selling pressure as market participants await more clarity on the new variation of the coronavirus and its implications on whether or not the current vaccine will also protect individuals against this new variation.
- source : FXEMPIRE