Price of Gold Fundamental Daily Forecast – Shorts Still Covering as Congress Moves Closer to COVID-Relief Bill

Gold futures jumped more than 1% to its highest level since November 23 on Monday, bolstered by expectations of fresh fiscal stimulus in the United States. Since early last week, renewed stimulus talks have helped stabilize the gold market enough to spook some of the weaker shorts out of the market following a more than $100 plunge.

Meanwhile, following Friday’s weak U.S. jobs report, U.S. lawmakers seem to be a little more motivated to hammer out an agreement on infusing long-awaited relief through a $908 billion bill.

On Monday, February Comex gold settled at $1866.40, up $26.40 or 1.43%.

Gold has recovered more than 5% since slumping to a five-month low on November 30, with the month also marking bullion’s worst month in four years, pressured by hopes of a vaccine-fueled economic recovery.

Coronavirus Relief Update

As far as the fiscal stimulus package is concerned, lawmakers made it clear on Monday that the proposed coronavirus relief bill won’t include $1,200 checks for individuals.

With time running out, lawmakers on Sunday closed in a proposed COVID-19 relief bill that would provide roughly $300 in extra federal weekly unemployment benefits but not another round of $1,200 in direct payments to most Americans, leaving that issue for President-elect Joe Biden to wrestle over with a new Congress next year, MarketWatch reported.

The $908 billion aid package would be attached to a larger year-end spending bill needed to avert a government shutdown this coming weekend.

The cash payments were popular when they were first distributed after the pandemic hit, and Biden on Friday had expressed hope that a second wave might come after weekend negotiations.

The current plan being worked on by a group of Republican and Democratic senators is less than half of the Democrats’ push of $2.2 trillion and nearly double the $500 billion “targeted” package proposed by Senate Majority Leader Mitch McConnell of Kentucky.

“President Trump has indicated that he would sign a $908 billion package – there’s only one $908 billion package out there and it’s ours,” Senator Bill Cassidy said Sunday. “The pain of the American people is driving this, and I’m optimistic that both those leaders will come on board.”

Short-Term Outlook

Keep in mind that this is not a stimulus bill; it’s a relief bill. Therefore, the gains in the gold market are likely to be limited. Furthermore, the news has been out there for over a week, which likely means this is going to turn into a “buy the rumor, sell the fact” situation.

Decision time for traders will be following a test of $1870.30 to $1894.60. This zone is 50% to 61.8% of the break from $1973.30 to $1767.20.