On the final trading day of the week, the gold price is consolidating at highs. The precious metal owes its strength to a nosedive of the US currency.
Today on the New York Mercantile Exchange, February gold futures are trading 0.28% up, having gained $3.25 per troy ounce. The previous metal is now trading at $1,840.65 per ounce. Support is seen at $1,824.8 and resistance is about to reach $1,879.8.
Unlike gold, silver futures for March delivery shed 0.16% to trade at $24.03 per troy ounce.
Likewise, March copper futures also slipped 0.78% and settled down at $3.55 per pound. Nevertheless, even despite such declines copper is firmly holding at highs. In the meantime, the market of precious metals receives a boost from the weak US dollar. The US currency is still extending its broad-based weakness. In this context, gold is viewed as a lucrative investment as there is an inverse relation between the gold and greenback's dynamics.
Gold is traditionally seen as a hedge against inflation and currency depreciation. Meanwhile, investors are keeping appetite for risk. They believe that efficient jabs against COVID-19 and mass vaccination worldwide will set the stage for a global economic recovery. The market of precious metals has solid conditions for the bullish trend. Positive market sentiment could be overshadowed by extremely bad news which hasn't appeared on the horizon yet.
Importantly, the US dollar has been weighed down by uncertainty about a long-awaited stimulus bill which cannot be settled by the US lawmakers. Besides, the Federal Reserve also advocates for the dovish monetary policy.
Investors pin hopes on the benign effect from mass vaccination. Otherwise, if something goes wrong with vaccines, investors would be caught off-guard and the market response would be unpredictable.
In the meantime, investors are keeping close tabs on the talks on a stimulus package. US lawmakers cannot reach a compromise on a size of financial aid to prop up the crisis-stricken national economy. The Senators have agreed on the point that financial aid has to be expanded but its volume still remains an open question. The latest proposal by the US Treasury Secretary was a draft bill worth $916 billion.