Gold price falls, rises due to economic worries.


A stronger US dollar pushed the price of gold down, as investors fear that the new economic stimulus plan will not be adopted soon
Gold is popular with investors because it is a hedge against inflation and currency devaluation
Yellow metal prices now approaching the 4-month trend support line near $1,890/ounce

Gold spot prices are on the verge of closing almost 1.5% lower as investors fear that the new stimulus plan will not come soon.

Fundamental Analysis: Dollar Strengthens

Gold prices rose on Friday on the back of recent optimism regarding the new economic stimulus package in the US. There is a general belief that the price of yellow is more attractive in the eyes of investors as a hedge against inflation.

Robin Bhar, an independent analyst, noted that while a new stimulus package is unlikely to be passed before the election due to time constraints, it will “definitely” be passed after the election.

“This would be a bullish catalyst for gold,” he added.

Gold has been a popular choice among investors this year as it is seen as a hedge against inflation and currency devaluation after an extraordinary incentive was created at the global level to contain the effects of the pandemic. The yellow metal has risen by almost 27% since the beginning of the year.

On Monday, a White House spokesman said that Republicans in the Senate will support President Donald Trump’s intentions when it comes to legislation to combat the corona virus.

“There is still a lot of volatility on the road to the U.S. elections, but in the medium term it will take a long time to withdraw the monetary policy incentives already in the system, and that is support for gold,” said Xiao Fu, an analyst at Bank of China International.

Right now, according to polls, Joe Biden is leading the presidential race.

“A so-called ‘blue wave’ would probably pave the way for a larger fiscal support package, which in turn could put more upward pressure on gold bars. In the meantime, a protracted delay in the U.S. election results could also fuel risk aversion,” said FXTM market analyst Han Tan.

However, the dollar strengthened today due to negative reports related to the COVID 19 vaccine, which pushed the price of gold down.

Technical Analysis: Gold Price Retreat

Today gold’s gains were capped by a stronger dollar. Spot gold prices traded at $1,921.21 per troy ounce this morning before correcting well below $1,900 before the opening of New York.

Gold Daily Chart (TradingView)

The price action is now approaching the 4-month supporting trend line near $1,890/ounce. This support line is further strengthened by the 200 DMA, which stands at $1,865, providing a solid opportunity to buy gold.


The gold price fell today due to declining hopes for a new stimulus package in the US. As a result, the spot gold price is trading below $1,900/ounce again.


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