Gold Closes Slightly Higher As Dow Approaches 30,000

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It was absolutely a risky day favoring stocks and taking the Dow Jones Industrial Average to a new all-time high as the index trades just under 30,000. The Dow Jones gained around 1.60%, a total of 470.63 points in negotiation today and closed at 29,950.44. Stocks made a dynamic bullish move today based in part on news from Moderna Inc. which said its vaccine was shown to be 94.5% effective in preventing Covid-19 infections.This rally comes as the pandemic has now reached epic numbers with the number of reported infections now exceeding 54.5 million cases to date. That includes 11 million cases in the United States, which has added about 1 million new cases in the past six days. The United States accounts for about a fifth of infections worldwide.

It should be noted that, as part of the current rally in US stocks, there has been a rebalancing in which traders have shifted from focus tech companies to retail, airlines and other companies that respond to the more traditional consumer economy that has been so severe. affected by the pandemic.

However, I believe there are two major caveats to this rotation. News of a viable vaccine sparked optimism about the light at the end of the tunnel. However, the timeline for achieving this end is still unknown. Moreover, it does not take into account the massive economic benefits that will follow.

With millions of Americans currently out of work and businesses continuing to be affected by the growing number of daily cases, the need for fiscal stimulus is growing every day. It does not seem likely that a budget stimulus bill will be passed before the inauguration in January. Which means that Americans currently facing difficulties will only increase in numbers and the need for a viable aid program will grow greater day by day.

Gold futures closed slightly higher that day as they recovered from last week’s dramatic selloff on Monday. At 4:08 p.m. EST, the most active December contract is currently trading at $ 1,886.80, a net gain of $ 0.60 (+ 0.04%). It is also likely that the positive news about the vaccine is at such an early stage that the economic benefits will continue to grow. It is for this reason that we believe gold will form a base at the current price with major support at $ 1845.

However, on a technical basis, the fact that the 50-day moving average of gold appears to be able to drop below its 100-day moving average could indicate that the price of gold may fall towards the level of. major support at $ 1,845.

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Wishing you, as always, good trading and good health,

Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept any guilt for any loss and / or damage resulting from the use of this publication.

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