Daily Brief, Jun 24: Everything You Need to Know About Gold Today
Arslan Butt • 2 min read
Good morning, traders.
The precious metal gold prices closed at $1768.06 after placing a high of $1771.25 and a low of $1747.58. Overall the movement of gold remained bullish throughout the day. Prices rose for the third consecutive day and crossed the $1770 level and were just $9 away from $1800 level on Tuesday. The uptick in GOLD prices came after the US dollar became weak due to the fresh stimulus planned by governments across the world to fight the second wave of coronavirus.
On Tuesday, the US Treasury Secretary, Steve Mnuchin said that if US companies are not allowed to compete on a fair basis in China’s economy, it will result in a decoupling of the US & Chinese economies. He said that he had high expectations that China would live up to the terms of the Phase-one trade deal by purchasing a massive amount of US farm goods, services, and energy products. He also added that the US should compete on a fair and level playing field because that was an excellent opportunity for US businesses and US workers, and if that could not be possible, then a decoupling was next to come.
On the coronavirus pandemic front, Mnuchin said that he hoped to have the next aid package from Congress in July. But he added that there was no need to rush as hundreds of billions of dollars from the last issued bill which was passed in March, were still undistributed. He informed that Congress’s next bill would be more targeted to businesses that need help towards returning most people to work ASAP.
Mnuchin said that it was highly unlikely that the US economy will shut down again, even though concerns about the second wave of COVID-19 were increasing day by day. He added that the next stimulus package would be referred to as CARES 4, (Coronavirus Aid, Relief and Economic Security Act) as three and half of CARES so far has been done already. Previously, a total of 3.3 trillion dollars as loans and grants to paycheck protection for workers, businesses, and personal aid to qualifying US citizens was approved.
According to analysts, the tsunami of stimulus coming in from everywhere is inflationary in nature but also depicts a weaker outlook for the economy, making gold more attractive. On Tuesday, after the hints of a new stimulus package coming in from US congress in July, the US dollar became weak. The US dollar index slipped 0.3% on this news towards 96.657 level. The weakness of the US dollar added strength to yellow metal prices.
On the data front, the highlighted Flash Manufacturing PMI from the US also came in less than expectations of 50.0 as 49.6 and weighed on the US dollar, which eventually proved beneficial for gold prices.
Daily Technical Levels
Pivot Point: 1776.82
Gold has violated the double top resistance level of 1,762 level. Above this, the precious metal is forming Doji candles which are suggesting odds of selling bias. For now, prices can drop on the back of retracement until 1,762 level. Closing of candles above this can drive more buying until 1,794 levels. Bullish bias seems dominant.