Price of Gold Fundamental Daily Forecast – Traders Surfing Headlines as Fed Starts 2-Day Meeting

Gold futures are moving higher on Tuesday, driven by rising expectations of additional fiscal stimulus from the U.S. government. A surge in COVID-19 cases and the thought that the vaccine is not a silver bullet that will stop the pandemic quickly is also helping to push prices higher.

Meanwhile, the U.S. Dollar is weakening, which is making dollar-denominated gold more attractive. Traders are also anticipating dovish news from the Federal Reserve on Wednesday as policymakers start their two day meeting.

At 11:23 GMT, February Comex gold is trading $1846.60, up $14.50 or +0.79%.

Expectations of additional U.S. fiscal stimulus were lifted as President-elect Joe Biden won the Electoral College vote, while lawmakers remained optimistic over a fiscal stimulus deal, pushing the U.S. Dollar to challenge 2-1/2 year lows.

Spreading COVID-19 cases in Europe, Asia, South Korea and the U.S. are raising expectations for further stimulus along with lockdowns and restrictions in the Netherlands, Germany, London and New York. Investors may be positioning themselves ahead of policy meetings of the U.S. Federal Reserve starting Tuesday and the Bank of England on Thursday.

Daily Forecast

The market is rising following a successful test of a short-term support area at $1823.50 to $1810.20. At this time, it only means short-term traders have found a value area. If this area fails as support then look for the selling to possibly extend into the long-term value area at $1780.50 to $1705.20.

On the upside, the primary target zone is $1870.30 to $1894.60. Buyers would have to take out the upper level of this range to generate strong momentum.

The price action this month indicates that investors are following the headlines on fiscal stimulus.  However, the size of the proposed stimulus package is too small to get investors very excited.

We see short-term support at $1823.50 to $1810.20 and short-term resistance at $1870.30 to $1894.60.

The Fed could be the wildcard. An extremely dovish Fed on Wednesday could trigger a mild breakout over $1894.60, but it if disappoints then prices could plunge into $1780.50 to $1705.20.

For a look at all of today’s economic events, check out our economic calendar.