Daily Brief, Jan 28: Things You Should Know About Gold Today
Arslan Butt • 2 min read
On the fundamental side, all eyes will be on the US durable goods, which are expected to support the US dollar today. In that case, the dollar related currency pairs may encounter price action. Gold prices closed at $1581.88 after placing a high of $1588.3 and a low of $1575.87. Overall the movement of gold remained bullish that day.
GOLD prices climbed near the 3-week highest level on Monday after the rising concerns about the coronavirus outbreak and its negative impact on the global economy. This situation forced the investors to move towards safe-haven assets as uncertainty emerged in the market.
There were reports from China that the number of dead people because of coronavirus has increased to 81, and affected people were counted as 2,800 in China. Despite the statement from the World Health Organization (WHO) that this virus was not an international emergency but more of a China emergency, the virus has spread to more than ten countries so far.
Countries like the United States and France have also reported positive cases of coronavirus. It looks like the WHO has to renew its statement of delaying to call this virus an international public health emergency. It has already spread to more than ten countries because of its contagious nature.
There was a big sell-off seen in the equity markets in China due to widespread coronavirus concerns, and demand for safe-haven assets got triggered. The potential downfall of the Chinese economy created panic in the market and raised investors’ fear.
US stocks also dropped more than 1%, and US 10-year Treasury yields fell to its lowest level in more than three months. Analysts are hopeful that Gold would cross the $1600 level if threats of coronavirus outbreak remained persistent and pointed towards a global economic slowdown. Earlier this month, gold had already passed $1610.9, its highest level of 7 years amid the rising fears of the US-Iran war after the US killed an Iranian general. But the rally was short term, and gold reverted lower.
However, investors in gold will also be looking out for Federal Reserve’s policy statement for January on Wednesday. Last year, the Fed cut rates by a quarter-point for three months back to back and muted the easing strategy in December.
Meanwhile, at 20:00 GMT, the New Home Sales for the month of December from the United States fell short of expectations and weighed on the US dollar. The figures showed that a total of 694K houses were sold in the month of December, which was expected to be as 730K. A weak US dollar gave a boost to the upward trend of gold prices on Monday.
Daily Technical Levels
Pivot Point: 1580.45
The gold technical side remains the same. Gold prices are holding above 1,577 support zone, and bearish breakout of such level can extend bearish trend until 1,572 level. The overall trend is bullish now, but this gap should be filled before we see more buying in gold. Good luck!