If the Fed has spurred its horses, Donald Trump has reined them in. The confrontation between the Central Bank and the former US President resumes in no time, and gold is particularly sensitive to it. XAUUSD prices soared to a 1.5-month high after the FOMC expressed its willingness to keep the federal funds rate low until at least the end of 2023, and Congress passed an $892 billion fiscal stimulus bill. Nevertheless, the situation did not favor the bulls for long. Trump's announcement that he would refuse to sign the document came as a surprise for them.

Joe Biden's inauguration is less than a month away, but so far his predecessor continues to run the White House. Trump pulled another stunt, calling the $892 billion fiscal stimulus and the $1.4 trillion government spending package approved by Congress a disgrace. Say, what is $600 per American? You need at least $2000! Uncertainty is a paradise for the US dollar, the strengthening of which has cooled the ardor of the bulls on XAUUSD.

Dynamics of gold and US dollar:

The news of a new strain of COVID-19 discovered in Britain added fuel to the fire. Boris Johnson was forced to introduce new restrictions, which negatively affects the economy and global risk appetite. If someone thinks that this is a problem exclusively for Britain, they are mistaken. It is likely that other countries will follow suit.

At the same time, WHO is optimistic and believes that new vaccines can stop any type of coronavirus. The EU has called on its member countries to open their borders with Britain, so it is likely that the alarm will be false. As for Donald Trump, it is likely that his behavior is nothing more than posturing. The U.S. economy needs a stimulus, and Trump is well aware of that. Gold's problems look temporary, so the bulls on XAUUSD are retreating, but they are not going to throw a white flag.

Despite some difficulties that the precious metal faces at the end of the year, its long-term prospects look optimistic. A reflationary environment should be added to the weakness of the US dollar due to double deficits, low debt market rates, and a loss of interest in safe-haven assets. Joe Biden noted that the worst for the United States is yet to come, but will not live badly for long. The stimulus package passed by Congress is just the beginning, and more needs to be done. The Democrat is talking about a potential expansion of fiscal assistance, which will push up inflation expectations and consumer prices. At the same time, interest in gold, which traditionally serves as an asset that protects against inflation, will return.

Technically, the inability of the bulls for the precious metal to overcome the pivot levels at $1890 and $1905 per ounce, at first glance, indicates their weakness. However, it is quite possible that buyers retreated in order to prepare for a new attack. The outlook for gold remains bullish, which is confirmed by the active Wolfe Wave pattern. In such conditions, breakouts of $1885-1890 and $1900-1905 resistances should be used for purchases.

Gold, daily chart: