Daily Brief July 24 – Gold Skyrockets Amid Boosted Safe Haven – What to Expect Today
Arslan Butt • 2 min read
Happy Friday, traders,
Prices for the precious metal, GOLD , closed at 1,887.33, after placing a high of 1,898.39 and a low of 1,863.61. Overall, the movement of gold remained bullish throughout the day. Gold prices jumped more than 1%, remaining just shy of the 1,900 level on Thursday, boosted by an easing dollar and hopes for more stimulus to support economies through the coronavirus crisis. However, concerns of slower economic recovery increased after a rise in US jobless claims.
Gold rose to just $ 2 below the $ 1,900 level on Thursday, on the back of the weak US dollar, which dipped by 0.3%, hitting a low close to the lowest level in two years, thus making gold expensive for holders of currencies. Gold was also fueled by the rising demand for a haven, after the expectations of further stimulus measures from central banks worldwide and geopolitical tensions increased.
US Senate Republicans were planning to propose another round of direct payments to Americans, in the next coronavirus relief bill, as the previous one is about to expire. The number of unemployed people who applied for unemployment benefits rose unexpectedly last week, for the first time in four months. The increased number of Americans filing jobless claims suggested that the labor market was stalling, due to a resurgence in COVID19 infections in the US.
The data exceeded the expectations of 1.3 M, coming in at 1.416 M last week; the rise in figures means that the US economy has a long way to go before it starts to recover.
On the US-China front, the global geopolitical tensions rose, as the US ordered China to close its consulate in Houston, Texas. Beijing called this action “a move of political provocation.”
However, US Secretary of State Mike Pompeo said that the decision was due to the fact that China was stealing intellectual property. China’s foreign ministry condemned the move, saying that employees at its embassy in Washington were receiving death threats.
The Chinese foreign ministry spokesman said that the reasons for the US closing the consulate were unbelievably ridiculous. She urged the US to reverse its erroneous decision, or China would react with firm countermeasures.
In response to China’s reply and their associated outrage, US President Donald Trump hinted at the closure of more Chinese consulates. However, the rising tensions between the US and China gave the safe-haven appeal a boost, pushing prices for the yellow metal up, towards a record-breaking high, close to the highest level in nine years Thursday.
Daily Technical Levels
Pivot point: 1881.42
GOLD is trading at the 1,887 level, and recently, it closed a Doji candle below 1,897. Gold has closed shooting stars along with Doji candles, which support bearish correction. Therefore, gold prices could extend a bearish correction, to levels of 1,875 and 1,869. However, the bullish breakout of 1,887 extends buying until 1,898. As per the medium-term forecast, gold may find solid resistance at around the 1,915/20 levels, and below this, the odds of selling remain solid. Good luck!