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In the words of Glenn Frey; “The heat is on … The pressure's high”
Unquestionably there is an immense amount of pressure for lawmakers to come to a understanding and pass a greatly needed fiscal stimulus package before the end of the year. It is critically important that aid is available to those 10 million American individuals who are unemployed with their benefits running out this month. Concurrently the moratorium eviction is coming to an end on December 31, unless it is extended.
These challenges are also in competition with a special budget stop gap bill to fund government service by December 11.
Statements made today by House Speaker Nancy Pelosi in conjunction with Senate Minority Leader Chuck Schumer have urged the Senate to agree upon this bipartisan proposal which contains $908 billion of fiscal stimulus. The hope is that this latest round of negotiations will lead a fiscal stimulus bill being passed and enacted by the end of the year.
The importance of passing a fiscal stimulus bill cannot be underscored. The pandemic continues to grow, which is continuing to deepen the current economic contraction. Those affected by the pandemic include both businesses as well as individuals. Currently there approximately 10 million Americans that are unemployed and require assistance in terms of unemployment benefits.
The challenge is that there is still a deep chasm between the three different proposals that are currently being reviewed. The sad truth is that many lawmakers are sticking to their partisan views. Which means that McConnell as well as Pelosi seem to be fairly dug into their current positions with very little wiggle room for compromise.
However, there is still hope. According to a report on CNBC, “Democratic House Majority Leader Steny Hoyer, D-Md., was set to speak to McConnell on Wednesday about a pandemic relief measure. Earlier, the No. 2 House Democrat told reporters he hopes the parties can strike a deal by the end of the weekend and pass it by next week.”
While House Speaker Pelosi along with Senate Minority Leader Chuck Schumer are hoping to pass the $908 billion bipartisan stimulus plan that was proposed recently. They have gone as far as urging Senate Majority Leader Mitch McConnell to endorse that stimulus plan. However, McConnell seems to be in favor of a $500 billion stimulus relief bill. Whether or not these two camps can both compromise and meet in the middle will determine the outcome.
Gold futures bases the most active February contract gained approximately $14 in trading today and as of 6:11 PM EST is fixed at $1844.50. Silver also had a respectable gain with the most active March contract currently fixed at $24.185. Both metals were aided by dollar weakness which gave up almost ½ a percent and is currently fixed at 90.685.
On a technical basis gold’s current pricing is at its first minor resistance which is $1846.50. This number is derived from the 38.2% Fibonacci retracement level which uses a data set beginning in March when gold was trading at $1450, up to the record high price achieve the first week of August at $2088. We see the next level of resistance currently fixed at gold’s 50 day moving average which is at $1883, with the 100-day moving average at $1914 being major resistance.
Our studies also indicate that there is strong support at $1807 which corresponds to gold’s 200 day moving average with major support at $1771 the 50% retracement.
While there is no certainty that lawmakers will be able to agree and enact a stimulus package before the end of the year, I remain cautiously optimistic.
Contributing to kitco.com
