Daily Brief, Jan 23: Things You Need to Know About Gold Today
Arslan Butt • 2 min read
Good morning, traders.
On Thursday, the precious metal gold continues to trade sideways due to a lack of economic events. A day before, gold prices closed at $1558.600 after placing a high of $1559.220 and a low of $1550.150. Overall the movement of gold was steady on that day.
GOLD prices on Wednesday eased a little as the rising fears of coronavirus spread but started to rise on the back of expectations of dovish monetary policy from global central banks.
The China virus spread increased the risk sentiment in the market and weighed on gold prices. Yellow metal dropped to $1550 level after the US dollar held firm against the rising fears for virus spread. After the health emergency announced by the World Health Organization (WHO), many countries started using screening measures to check travelers, especially those who were coming from China to avoid the global spread of that virus.
It was also revealed that coronavirus, which was first seen in Wuhan city of China and then spread to its major cities like Beijing and Shanghai also, can be transmitted from human to human. The fact that nine people were declared dead because of that virus since its spread in late December raised fears across the globe.
On Wednesday, 540 confirmed cases of affected patients in China were reported, and Chinese health officials said that as more people will travel to China for Lunar New Year, strict countermeasures to stop the spread have been adopted.
There was the first case of American man affected by coronavirus announced on Tuesday in the US. This added to the fears of a widespread outbreak of the virus, and hence risk-on sentiment came in the market and weighed on yellow metal prices.
However, on the other hand, there were expectations in the financial markets that the tone of global central banks was still dovish in case of monetary policy. Investors were positive that the Bank of England and Reserve Bank of Australia still have the potential for a rate cut. However, the Federal Reserve and the European Central Bank have more hawkish sentiments.
The ECB is set to hold its first monetary policy meeting of this year on Thursday, while the first meeting of the Federal Reserve is scheduled for 28-29 January.
The dovish stance from global central banks despite the phase-one trade deal agreement between the United States and China supported gold prices on Wednesday. Lower interest rates reduce the opportunity cost of holding non-yielding stocks & currencies, which weigh on the US dollar and ultimately support yellow metal prices.
Gold prices on Wednesday fell in the early session and then moved upward in the late session amid the dovish stance of central banks. Gold prices ended its day on the same level it was started with and hence gave a steady movement for the day.
Daily Technical Levels
Pivot Point: 1558.13
Gold – XAU/USD – Technical Outlook
Gold is also trading with a neutral bias, maintaining a sideways trading range of 1,566 – 1,549. On the 4 hour timeframe, it has formed a series of Doji and Spinning top candles, which signals indecision among traders.
Today, the precious metal may find immediate support around 1,555 levels, which is likely to keep it bullish until the next resistance level of 1.561. A bullish breakout of this level can drive more buying until 1,565. On the lower side, the violation of 1,555 support level can extend selling until 1,551 level today. Good luck!