Price of Gold Fundamental Daily Forecast – Traders Balancing Vaccine Optimism Against Stimulus Hopes

Gold futures are edging lower shortly after the mid-session on Monday as the rollout of the coronavirus vaccine in the United States is outweighing hope for a new coronavirus relief package. Sellers believe a successful launch of the vaccine will lead to a swifter recovery in the economy, dampening the need for further stimulus in early 2021.

At 18:45 GMT, February Comex gold is trading $1831.20, down $12.40 or -0.67%.

Vaccination Optimism Capping Prices

Lifting hopes that the tide is beginning to turn on the pandemic, boosting sentiment for equities and dampening the chances of a gold market rally, was news that the first shipments of coronavirus vaccines were speeding across the U.S., with inoculations beginning early Monday.

The United States on Monday administered the first shots of Pfizer’s COVID-19 vaccine to health-care workers, marking a pivotal moment in the country’s long march to bring the virus under control.

The vaccine comes at an urgent time, with the U.S. nearing 300,000 total COVID-19 deaths and top health officials warning that daily new deaths might not slow for months, even with a vaccine.

Bipartisan Group to Release COVID Relief Bill as Congress Faces Pressure to Send Help

Congress aims to approve another coronavirus relief package and a government funding bill this week as millions are set to lose financial benefits during the pandemic.

A bipartisan group plans to release its $908 billion aid legislation Monday, but lingering disagreements over state and local government aid, liability protections and direct payments could make reaching a deal a challenge.

The measure would also put $6 billion into vaccine distribution.

Short-Term Outlook

Throughout the year gold prices have been support by both fiscal (short-term) stimulus and monetary (long-term) stimulus. The lack of new fiscal stimulus has been weighing on prices since August, but expectations of further help from the Fed has been enough to prevent prices from crashing.

While lawmakers in Washington continue to negotiate a new fiscal COVID-19 relief package, investors are gearing up for the U.S. Federal Reserve’s two-day policy meeting starting on Tuesday for cues on monetary policy.

A dovish Fed could provide further support for gold, but it’s going to take fiscal stimulus to spike prices higher over the near-term.