Gold Price Weekly Forecast: Bulls Need Bipartisan Support After Biden’s Boost

Is the US a “shining city on a hill,” as then-President Ronald Reagan said? The new occupant of the White House, Joe Biden, has helped gold shine by showing determination in pumping funds into the economy. The upswing now depends on bipartisan support, vaccine developments, and the Federal Reserve’s decision.

This week in XAU/USD: United, gold rises

President Joe Biden has been calling for unity and urgent support to the economy. His inauguration speech and actions since taking office have convinced investors that there is a growing chance that Congress approves – at least a large part of his proposed $1.9 trillion stimulus bill to support the economy. Treasury Secretary nominee Janet Yellen also called for going “big”.

Gold has risen in response to higher prospects of more money flooding the world – potentially funded by debt, as taxes seem to have slipped off the agenda. However, concerns about a Republican pushback have limited gold’s gains.

Coronavirus cases have continued rising worldwide, supporting the case for more government funds. Several European countries have extended their restrictions and the UK, unfortunately, recorded a death toll described by Prime Minister Boris Johnson as “appalling. In the US, there is no relenting, with mortalities surpassing the 400,000 mark.

The European Central Bank left its policy unchanged and initially hinted it could cut its bond-buying scheme. However, ECB President Christine Lagarde later stressed that the bank remains flexible on the topic.

Overall, the ongoing flow of funds has been keeping XAU/USD underpinned. 

Next week in gold: Congress, the Fed, and the virus

After the inauguration party and calls for unity, the hard work begins for Biden. While Republicans are set to lower their tone after President Donald Trump’s departure, they are may still fight against expenditure they dislike.

Will Democrats manage to pass a large part of their plan on their own or go for quick yet smaller funding? For gold and broader markets, the more and the sooner, the better. Any sign of bipartisan support could push the precious metal higher, while discord would weigh on it.

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