The price of gold on the global market reportedly jumped about 1% yesterday. This was triggered by the weakening of the USD while market participants were still hopeful of the United States stimulus package. The situation remains despite Donald Trump threatening to scrap the proposal.

The strengthening gold price then makes market participants also interested in buying other currencies. That led to the dollar index weakening by about half a percent. Apparently, they predict that the weakening of the U.S. dollar index will continue in 2021.

President Donald Trump has threatened not to sign off on an $892 billion Covid stimulus proposal that is believed to help and save the U.S. economy weakened by the pandemic. Trump argued that the amount of stimulus should actually be greater than the current proposal.

Gold Likely to Continue to Strengthen

An analyst from Natixis, Bernard Dahdah, said that even if Donald Trump refuses to sign the proposal, then Joe Biden as the next president could pass the stimulus. Therefore, such a stimulus will probably take a little longer.

For this reason, the trend of strengthening gold prices may continue to be seen in the near future. For information, the USD was corrected after strengthening in three consecutive sessions. That's because risk appetite has increased due to signs of a Brexit deal.

Elsewhere, the Sterling and the euro strengthened after news emerged of Brexit progress. The same is the case with some of the currencies on the market such as the Australian, Canadian, and New Zealand dollars. They are equally in a strengthening trend against the USD lately. 

Britain and the EU did show signs of reaching an agreement after lengthy negotiations. A reporter for Britain's Daily Mail even said that a deal had actually been reached. There is speculation that the British Prime Minister, Boris Johnson, will announce it soon.

Dollar Index Weakening This Year

Based on existing data, the dollar index has indeed weakened more than 6% this year. It comes as market participants are also speculating that the Federal Reserve will maintain the ultra-accommodative monetary policy. It cannot be denied that the weakened USD creates hope for some countries.

Expectations for further weakening of the currency provided fresh headwinds for the strengthening of capital markets and currencies in many developing countries. Meanwhile, United States economic data released on Wednesday looks mixed, but the impact on price movements is relatively small.

Unemployment claims data turned out to be unexpected. Those claims are down on last week, although they are still likely to be on an upward trend. A separate report showed that the level of public spending was reduced for the first time since April. 

Brexit Deal and It's Breakthrough

The market continues to watch the Brexit breakthrough on Christmas Eve. Many are awaiting a joint conference likely to be held by British PM Boris Johnson and EU Chairman Ursula von der Leyen. According to media reports, the two sides will speak before announcing to the presser. 

Discussions on key issues that have not been agreed on are fisheries and level playing fields conducted overnight. It seems that the leaders of the UK and EU are now in a possibility to reach the deal. Most major European markets remain closed during the Christmas holidays. 

Sentiment remained positive amid Brexit optimism that the situation weighed on the US dollar as a safe-haven. GBP/USD was higher at around 1.3550 and consolidated Wednesday's rally. A thinning market for holidays can also trigger unusual FX volatility. There's something interesting to watch.

Markets appear to have ignored President Donald Trump's threats of a $900 billion aid package. However, House Speaker Nancy Pelosi agreed with Trump's views on greater individual vetting. Pelosi said the House would try to pass the proposal on Thursday.