The US dollar continues to depreciate against other major currencies, having fallen to a new year low during early Thursday trading. The greenback’s losses come following a combination of market friendly news, which include positive signals from US lawmakers regarding a bipartisan agreement on an economic stimulus package, growing confidence in multiple COVID vaccines, and an increasingly likely post-Brexit trade deal between the EU and the UK. Inspired by this cocktail of good news and by the Federal Reserve’s latest statement, where they pledged to maintain low interest rates until 2024, investors are embracing riskier assets and walking away from the safe-haven dollar.
A weak US dollar combined with a new stimulus and a dovish Fed have created the perfect scenario for a new rebound for bullion. After some initial uncertainty, the positive momentum that has driven gold in the last few days has accelerated with the price jumping above the resistance level of $1,872-$1,875 to touch a new 3-week-high, before some modest profit taking in the European morning.
Summarizing the last few weeks of gold, we could say that the news about vaccines pulled up stocks and crashed the gold price in November. After this initial movement, investors realized once again that central banks will be forced to print money and to keep generating stimulus. In short, interest in gold will remain huge for a long while yet.
Independent writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.