EURUSD Weekly Outlook: 19th October 2020 EURUSD rose in the European market on Monday against…
Gold price rises from its lowest level in seven months
Gold price achieved a rise at the beginning of the week’s trading in the European session, retreating from its lowest level in seven months that it recorded earlier trading, the current rise comes supported by the weakness of the US dollar against many major currencies, despite the rise in US Treasury bond yields to the highest Her level in one year.
During today’s trading, gold prices rose by 1.0% today to trade at $ 1799 an ounce, retracing from its lowest level in seven months at $ 1760 per ounce, which it recorded last Friday.
Last week, the yellow metal recorded its second consecutive weekly decline, with losses estimated at 2.2%.
Gold price under the stimulus package
Gold price finds resistance as the prevailing demand for cryptocurrencies increases, as the crypto frenzy is likely to continue with the $ 1,400 direct checks that include the US relief package. Besides, the stimulus is likely to lead to inflation, prompting the Federal Reserve to raise Interest rates, and the subsequent strengthening of the dollar is a source of concern for investors looking to trade gold.
President Biden’s $ 1.9 trillion relief package has been prepared to facilitate the recovery of the US economy, as lawmakers in the country strive to finalize legislation by mid-March. The package includes direct checks of $ 1,400 per person. Upon receipt of this payment, the number of A large beneficiary will be buying cryptocurrencies, this will push up the prices of various digital currencies while leading to a drop in gold prices.
At the same time, direct payments may lead to an abundance of dollars. If this happens, the value of the dollar will depreciate, forcing the Federal Reserve to increase interest rates. With a stronger dollar, investors are likely to convert their resources into dollars. This will lead to an unfavorable environment for rates.
On Friday, the Reserve Bank warned of the risks that may befall the economy in the event of the failure of ongoing business in the United States.
Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.