GOLDWELL：Daily Market Recap - GOLD Surges on Fed 2 Day Meeting

Gold futures are trading higher on Tuesday on the back of increased speculation that an additional round of fiscal stimulus from the US government will be announced in the coming days. The precious metal is up over 1.30 percent at the time of writing.

Markets are gearing themselves for dovish news from the Federal Reserve after its two-day meeting ends on Wednesday as both US treasury yields and equities are rising steadily late in the trading session, a sign that investors are expecting additional stimulus to kick in shortly.

As a result of the ongoing fiscal stimulus discussions, the US Dollar has been under pressure with the Dollar index (DXY) eyeing levels last seen in April 2018. The continued weakness in the greenback is helping to support the bullion as a lower dollar renders gold a relatively cheaper asset to buy.

Furthermore, with the recent hike in covid-19 infection rates across the US, Asia, and Europe, traders are likely hedging their bets against an overly optimistic recovery scenario. Despite all the elation surrounding the discovery of a vaccine, we will likely have to wait until well into next year before a significant amount of the population will be inoculated, indirectly offering some support to gold in the short run.

From a technical perspective, gold is now testing the pivotal 1,852 handles after having convincingly beaten the 20 day MA resistance zone. The next upside target will be to close above the 1,852 marks and set up a test of the psychologically significant 1,900 level.

Failure to hold above the 1,852 level may signal buyers are losing steam and could hand control back to the bears. The downside target will likely be the 0.5 Fibonacci retracement level around 1,817.64 in continuation with the trendline from August highs.

Looking forward, headline trading on fiscal stimulus measures will continue to guide the gold market this week. Wednesdays announcement by the Fed will be closely monitored for any signs of overly dovish undertones which would give gold bulls the advantage to push higher. On the other hand, should the Fed come out hawkish instead, gold will likely take a turn to the downside.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.