FX.co ★ New year, new support. Gold continues to increase in value

Prices on the precious metals market continue to move up on Wednesday morning. The main driver of the environment is the weakening of the US dollar, which is rapidly reducing its position against major world currencies.

The price of gold futures contracts for February delivery on the electronic trading platform rose 0.33% or $6.2, which sent it to $1,889.05 per troy ounce. At the same time, support for gold was around $1,860.9 per troy ounce, and resistance went to $1,904.1 per troy ounce.

The price of silver futures contracts for delivery in March in the morning rose quite substantially by 1.46%, which sent the price to the level of $26.6 per troy ounce.

The price of copper futures contracts for delivery in March also shows positive dynamics gaining 0.56%, which allowed the metal to reach $3.5707 per pound.

Growth in almost all directions in the precious metal market was possible due to the weakening of the US dollar. Its index against a basket of the world's six major currencies continues to fall quite seriously for two consecutive trading sessions. By Wednesday morning the USD index has lost 0.2%, and the indicator moved to the level of 89.737 points. Such a low level has not been observed for quite some time. Moreover, this is the lowest value of the index for the last two and a half years.

It is worth noting that market participants continue to express hope that the global economy will soon begin to recover from the consequences of the economic crisis that occurred against the background of the coronavirus pandemic. The basis for such confidence is the new incentive program, which was recently ratified in the US. In this regard, the US dollar continues to lose popularity among investors. And against this background, gold is gaining wide popularity, as it becomes cheaper for holders of foreign currency.

Meanwhile, an active struggle continues regarding the amount of relief payments to the citizens of the United States. Donald Trump signed the budget for the year 2021 with the condition of raising the financial assistance from the previously announced $600 to $2,000. However, this amendment was blocked by Senate Majority Leader Mitch McConnell on Tuesday.

It is also worth noting that the policy of the new government lead by the newly elected US President Joe Biden, will also be in the hands of gold. Most likely, its significant growth will continue, since the US dollar will not be able to start strengthening, and large-scale restrictions against the background of attempts to stop the spread of coronavirus infection do not contribute to the strengthening of the US dollar at all. Of course, in this case, investors will rush to turn to gold as a traditional way of protecting capital and a "safe haven" in which to wait out all economic and political disasters.

According to most experts, the first month of the new year will be marked by an even greater wave of incentives against the background of the coming to power of the newly elected US President Joe Biden. At least, we can say with almost absolute certainty that the main task of the new government will be to fight the coronavirus and its consequences for the country's development. All this, of course, will become a pretext for tightening quarantine measures and additional incentives. Under these conditions, gold will gain special confidence in its abilities and will rapidly begin to grow in price. Thus, the short - and medium-term prospects for the precious metals market look more than positive, which may attract a new wave of purchases very soon. One thing is for sure: gold will not remain without support.