Gold: After a rebound, have fundamentals changed much?

Spot gold has rebounded by more than 5% from its low near $1,764, but have fundamentals changed much?

Gold 3

On Tuesday, spot gold extended its rebound by 0.4% to a 2-week high of $1,870, as U.S. stimulus hopes lifted market sentiment. Treasury Secretary Steven Mnuchin said he presented a fresh $916 billion economic relief bill to House Speaker Nancy Pelosi, a slightly larger package than the bipartisan proposal of $908 billion.

However, on the other hand, investment demand for gold appears to remain subdued even after a slump in prices. Bloomberg data showed that total known ETF holdings of gold was down 0.8% compared with end-November as of December 8.

In fact, the fundamentals for gold have not altered much, with expectations of roll-out of vaccines and recovery in global economy. Consequently, we might be approaching the limit of expansive fiscal and monetary policy soon.

Source: GAIN Capital, TradingView

The recent rebound may be seen as a technical rebound or short squeezing. On a daily chart, spot gold remains on the downside even though there might be some more room for rebound. It remains trading within a bearish channel drawn from August, and is capped by the declining 50-day moving average. The level at $1,920 may be considered as the nearest resistance, while the 1st and 2nd support are expected to be located at $1,765 and $1,735 respectively.

Get exceptional pricing & execution from a global market leader. Start trading with FOREX.com today.

OPEN AN ACCOUNT

More from Gold

Disclaimer: StoneX Financial Ltd (trading as "Forex.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, Forex.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by Forex.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although Forex.com is not specifically prevented from dealing before providing this material, Forex.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.