"There is momentum There is momentum"
Today during a news conference, the House of Representatives speaker Nancy Pelosi said, “There is momentum. There is momentum.” This is extremely great news considering that lawmakers have set this Monday as a deadline for completing the basic draft of a bipartisan fiscal stimulus bill which could then be put to a vote later in the week.
According to Reuters currently, lawmakers are in the middle of drafting the bipartisan proposal which would allocate an additional $908 billion in aid to those individuals and businesses gravely affected by the pandemic. U.S. Representative Tom Reed, who is a Republican co-chair of the bipartisan problem solvers caucus said that “We’re in the middle of drafting as we speak, and so … Monday is kind of the goal. This is about making sure that the money is allocated to those that are most in need.”
The Importance of allocating fiscal stimulus to aid those in need cannot be understated. For the millions of Americans that are unemployed, many will have their benefits cut or terminated at the end of this month. More importantly, the moratorium against evicting renters and homeowners will expire on December 31. Without additional aid, many analysts fear that millions could become homeless.
Gold futures had an excellent recovery this week gaining $50 per ounce. On a technical basis, we had many indicators that occurred before the pivot or key reversal witnessed this week.
On December 1 I wrote, “On a technical basis, two significant clues can be seen in a daily candlestick chart of gold futures. First is the fact that today’s gains moved current pricing above gold’s 200-day moving average. Secondly, we can identify a simple two-day candlestick pattern called an engulfing bullish. The caveat is that it becomes valid only after the following daily candle confirms the pattern. This would consist of a large green candle, meaning the market closed above its opening price. And should also contain a higher high and higher low than the previous candle.”
On December 2 we noted that we did get a confirming candle to the engulfing bullish pattern we identified the day before. Lastly, we noted that the lows achieved on Monday, November 30 match precisely with a 50% retracement of the rally which began at $1450 in March and concluded at $2088, the all-time record high achieved in August of this year.
With the probability that there will be a fiscal stimulus bill passed next week I would look for gold to continue to move to higher pricing, and concurrently look for the dollar to weaken.
By Gary Wagner
Contributing to kitco.com
David