Price of Gold Fundamental Daily Forecast – Vaccine Optimism Capping Gains, Stimulus Hopes Underpinning Prices

Gold futures are trading slightly lower on Friday, while inching toward a key technical area at $1823.50 to $1810.20 than could determine the near-term direction of the market. Helping to keep a lid on prices is a firmer U.S. Dollar and an air of caution as investors grapple with an impasse in negotiations over a U.S. COVID-19 relief package.

At 12:28 GMT, February Comex gold is trading $1835.00, down $2.40 or -0.13%.

The lack of volatility and low volume suggests investors are content with holding prices in a range as they continue to monitor data on vaccines, stimulus and the dollar. As far as the stimulus is concerned, the big unknown for traders is the size and scale of the relief package

Vaccine Developments

Promising vaccine trials are helping to lift some of the worries associated with the record increases in the number of new COVID-19 infections and deaths around the world.

The U.K. began inoculations this week and the United States could start vaccinations as early as this weekend, while Canada on Wednesday approved its first vaccine with initial shots due from next week.

Outside advisers for the U.S. Food and Drug Administration have voted to endorse emergency use of Pfizer’s vaccine, paving the way for the agency to authorize its use to inoculate a nation that has lost more than 285,000 lives to COVID-19.

COVID-19 Relief Package News

U.S. House Speaker Nancy Pelosi said on Thursday that Congress could work on a COVID-19 relief package until December 26, when a range of emergency aid programs are set to expire.

Additionally, Senate Majority Leader Mitch McConnell’s staff informed congressional leadership offices that Senate Republicans likely would not support a $908 billion bipartisan proposal, according to NBC News.

Earlier in the week, the negotiations sounded promising with Pelosi saying that bipartisan negotiations were leading to “great progress”, but as of Friday morning, it looks as if both sides are still far apart on key issues.

Daily Forecast

Traders may be content with holding prices in a range until the Fed meets next Tuesday and Wednesday. If there was no hope for fiscal stimulus, I think prices would be trading $50 to $100 lower, we’re likely to get stimulus by the end of the year or early next when Biden takes office. Furthermore the Fed will likely maintain its very loose monetary stance, which should provide long-term support.

Remember, monetary stimulus is the safety net, and fiscal stimulus drives the volatility.

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