Spot gold reversed course during Monday’s U.S. session, standing at $1,860 per ounce and extending its gain to 1.2% on the day. Spot silver also reversed its previous downtrend, extending its intra-day gain to 2%. The Shanghai silver contract rose more than 2 percent, after falling 2 percent at one point. Silver T+D hit 5100 yuan/kg, up 2.33% on the day.
At the beginning of European trading, spot gold was down to $1,822 and silver was down 2.6%. At 16:31-16:32 GMT on December 7, the COMEX’s most active gold futures contract traded 4,141 lots in two minutes, with the total value of the contract exceeding $750 million.
For the rally during the U.S. session, financial blog Zero Hedge noted that with the resurgence of today’s roller coaster ride in the U.S. dollar index DXY, which plunged after a pre-market surge in Europe, the precious metal moved higher, with spot gold pulling up toward the $1,870 level, spot silver standing at $24.50, and both gold and silver rebounding from key technical support levels.
The Birch Gold Group reports that although gold prices have fallen from the all-time high of $2,070 per ounce set in August, many institutions are expecting further gains as 2021 progresses.
Analysts also believe that the higher gold is related to the market’s expectation of new fiscal stimulus measures from the United States. As also mentioned in today’s YY Gold Circle, a U.S. Senate panel may unveil a bill today that calls for additional fiscal stimulus measures worth about $900 billion.
Kitco Metals senior analyst Jim Wyckoff said the stimulus package has helped stabilize the gold market, as injecting more money into the financial system can trigger inflation. Daniel Ghali, commodity strategist at TD Securities, said this is a seasonally strong period for gold prices, and we just experienced a recapitalization event where many weaker gold investors were pulled out of the market.
In addition, the news of Brexit has more or less had an impact. According to The Sun, British Prime Minister Johnson will tell the EU today that he will not change his position and vow to oppose France’s Brexit demands. Johnson may announce that the UK is moving forward with a no-deal Brexit, which would mean a complete rupture in negotiations with the EU. Subsequently, the British pound dived in the short term, falling as much as 1% during the day.
The dust has not yet settled on the Brexit trade talks and traders still need to monitor the developments. If a no-deal Brexit is finally achieved, the rise in risk aversion could also play a role in boosting gold prices.
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