On Tuesday, spot gold advanced 1.3% to $1,842, but seemingly lagging as compared with a 7.0% rally in silver, which jumped 4.8% further during Asian trading hours today.
European Union leaders have finally reached an agreement on a 750 billion euros stimulus package, while another round of U.S. fiscal support is expected to be released this week, commodity prices were buoyed by optimism over increasing industrial and infrastructure demand. Yesterday, we mentioned that expansionary fiscal policy should continue to provide support to gold prices.
From a technical point of view, spot gold has gathered more upside momentum after breaking above a 2-week consolidation range as shown on the 1-hour chart. In fact, it has broken above its previous high without showing a bearish RSI divergence. Bullish investors might consider $1,838 as the nearest intraday support, which is also the 61.8% Fibonacci retracement level of the rally started from July 17. The 1st and 2nd resistances are likely to be located at $1,880 and $1.890 respectively. In an alternative scenario, a break below $1,838 might trigger a pull-back to test the next support at $1,830.