Gold prices started the week on a positive note. However, they reversed lower midweek as the US dollar made a comeback.
The greenback rallied in response to the Georgia run-off results. The election outcome removed political uncertainty as both Democrat candidates won their races.
The Democrats now have control of the Senate along with the House of Representatives and the White House.
Despite the Trump riots at Capitol Hill, the markets now have confirmation that Joe Biden will be entering office on January 20th.
Gold has also come under pressure this week from the rally in equities markets. These exploded higher in response to the election news.
Traders are now firmly focused on fiscal stimulus expectations with both Joe Biden and Nancy Pelosi pledging to deliver sweeping packages.
The FOMC minutes midweek showed that policymakers at the Fed voted unanimously to keep asset purchases in place.
Despite the uptick in the dollar this week, the outlook for gold looks tilted higher. This comes as the dollar is poised for continued downside in light of the current easing expectations and the uncertainty around the COVID pandemic.
Gold Reverses Midweek
Following the breakout above the bearish trend line from 2020 highs, gold prices ran into selling pressure ahead of the 1980.66 level resistance.
Price has since slipped back below the 1919.92 support. However, it is being held up by the retest of the broken bearish trend line from 2020 highs.
While above here, the near-term bias remains bullish.
Silver prices tracked the moves lower in gold this week. Price reversed from initial gains as the resurgent dollar capped the rally in metals.
XAG prices have been moving broadly higher over recent weeks as the uptick in equities prices, as well as better manufacturing data around the globe, has helped improve the demand outlook for silver.
Silver Breakout Continues
Silver prices continue to trade higher within the broad bullish channel which has framed the rally off 2020 lows. Price recently broke above the bearish trend line from 2020 highs and above the 26.00 resistance.
While price holds above the 26.00 level, the near term bias remains bullish with bulls looking for a break above the 29.04 level next.