Daily Brief, July 29 – Everything You need to Know About Gold Today
Arslan Butt • 2 min read
Good morning, traders,
The precious metal, gold, set another record on Tuesday, with the dollar extending losses and traders rushing into safe-havens, as fears about the coronavirus pandemic increased. In contrast, equity markets rose on hopes for a fresh US stimulus package and more Federal Reserve assistance.
New spikes in coronavirus cases in Asia and Europe, on top of already high numbers of new US cases, are forcing governments to impose strict containment measures. This has clouded the global economic outlook, and limited the long stocks rally. The uncertainty surrounding the virus combined with the US-China tensions made gold rise nearly 30% on Tuesday, to hit another record of $ 1,981, smashing the previous day’s all-time high.
However, gold also fell about 1.8% on Tuesday, as the dollar firmed and investors squared positions after a rapid rally. As a result, gold fell near to the 1,906 level, as the focus was on the US Federal Reserve policy stance; however, it rebounded close to the 1,981 level again.
The US dollar index bounced off a 2-year low, as selling eased ahead of the Fed meeting, and hopes that a massive US fiscal package would be approved. The US Republicans introduced a new coronavirus relief proposal at the White House on Monday; however, the package faced opposition from both sides – from the Democrats and also from some Republicans.
However, the Fed, which began a two-day meeting on Tuesday, was widely expected to reiterate its accommodative policy stance. The panel is expected to reiterate that interest rates will remain near zero for years to come.
The focus on the next Federal Reserve policy meeting, and hopes of more support measures to ease the pressure on the world’s largest economy, pushed gold to record highs ahead of the meeting. Gold is likely to break the $ 2000 level as early as this week. The rush for bullion has also dragged silver to a seven-year high.
On the other hand, as the previous $ 3 trillion packages began to dry up, hopes that US lawmakers could bring out a new stimulus package rose. After an extended period of haggling at the White House, Republicans eventually revealed a $ 1 trillion scheme that reduced the unemployment benefit by two thirds.
White House speaker, Nancy Pelosi, criticized this, calling it a “pathetic” offer that was not enough to support the country.
On the data front, the CB Consumer Confidence fell to 92.6, from the projected 94.0, weighing on the US dollar and pushing the gold price even higher. The reduced consumer confidence could be attributed to the rising fears of slow economic recovery, as the number of coronavirus cases has hit the national high.
Daily Technical Levels
Pivot point: 1941.63
One day before, the precious metal soared sharply, placing a new high at around the 1,988 level and then dropping suddenly right thereafter, and now it is trading at around 1,936. GOLD may find immediate support at the 1,930 level now, and a bearish crossover below this level could lead its prices towards the 1,914 mark. While immediate resistance remains at 1,943 and above, 1,965 will extend major resistance. Bullish bias seems dominant above the 1,930 level. Good luck!