The price of gold rose slightly on Thursday morning, which can be explained by a positive correction against the background of the ongoing active discussion of the new financial incentive program in the US. For market participants, it is very important how the fate of this bill will develop since it will be able to give a solid impetus to the precious metals market and raise its prices to new heights.
The price of gold futures contracts for February delivery on the trading floor in New York climbed 0.28% or $5.4. Its current level is still at $1,844. 05 per troy ounce. The support level for the precious metal amounted to $ 1,824.8 per troy ounce, while the resistance went to the area of $ 1,879.8 per troy ounce.
The price of silver futures contracts for March delivery also went up by 0.5%, which sent it t0 $24.11 per troy ounce.
The slight increase in the value of gold occurred after the global subsidence of 2% on Wednesday. The day before, investors were more interested in news about the progress of trials of vaccines against coronavirus infection and their gradual introduction in various countries around the world. Of course, all this did not contribute to the growth of the metal market but rather had a depressing effect on it. The fact is that in such situations, market participants become more interested in risky assets, and the safe haven of gold remains out of business. Although the reliability of gold is no longer a popular trend, most analysts still tend to believe that this is a temporary trend that will soon lose its strength due to numerous factors of uncertainty and danger in the markets.
This week, the UK announced the start of its mass vaccination with a drug developed jointly by Pfizer and BioNTech. In addition, the US regulatory authorities have confirmed the effectiveness of this vaccine, issued all the necessary permits for it, so that vaccination will begin in America as early as next week. Of course, this news is not very pleasant for the precious metals market, but it does not feel any strong losses yet.
This is partly offset by the fact that investors are now more interested in news about the progress of the negotiation process on the adoption of a new stimulus program in the US. On Tuesday this week, a total budget of $916 billion was proposed. Previously, the estimated amount of incentives was $908 billion, but during the discussion, it was decided to slightly increase it, since the damage to the economy was caused on a global scale and it is still impossible to adequately assess the scale of the disaster.
Against the background of such news, the US dollar was under even greater pressure, and its rate continued to decline rapidly, which supported the precious metals market. The dollar index is slowly but surely falling against a basket of six major world currencies. This means that buying a precious metal becomes profitable for holders of foreign currency. They are the ones who are in a hurry to take advantage of the favorable market situation in order to buy gold cheaper. Moreover, experts say that such purchases will be the most profitable in the near future.
The price of copper futures contracts for March delivery also went up following gold. This is primarily due to the optimism that spread among investors after the latest news on the COVID-19 vaccine was released.
The price of the metal rose by 0.27% on Thursday, which allowed it to move to the level of $3.5078 per pound. It is also worth noting that the demand for physical copper is gradually growing, which will be a good incentive for further expansion of positions.
