The
GOLD prices closed at 1,918.67, after placing a high of 1,959.27, and a low of 1,900.75.
GOLD dropped more than 2% on Wednesday, as the US dollar rebounded, amid the rising US Treasury yields. Investor behavior showed that they were betting on a Democratic win in Georgia’s US Senate runoff elections. The profit-taking ahead of an anticipated swing in the Senate control to President-elect Joe Biden’s Democratic Party led the yellow metal prices down by 2% on Wednesday.
The Democrats already have the lower chamber of Congress, the House of Representatives, in their control. If they win the Senate elections and get control of the upper chamber, it will also give them a complete majority in the US legislative assembly and the power to push forward their agenda.
Joe Biden, whose term will begin on January 20, has hinted that he wants at least two stimulus packages in 2021, to overcome the damage caused by and expected to continue, due to the coronavirus pandemic. The first order is expected to push out $ 2,000 checks to most Americans; the Republicans have strictly opposed this measure. GOLD prices remained supportive, as an inflationary hedge, with investors expecting more fiscal stimulus, as the Democrats lead in runoff votes to determine control of the US Senate.
Meanwhile, the US Treasury yields for the 10-year note rose above 1% for the first time since March, raiging the opportunity cost of holding non-interest-bearing gold and weighing on its prices on Wednesday. Furthermore, the US Dollar Index was also firm on Wednesday, after falling to its lowest level in two and a half years, and this made gold less attractive for those holding other currencies.
On the data front, at 18:15 GMT, the ADP Non-Farm Employment Change for December came in, showing a drop to -123K, against the expected 60K, which weighed on the US dollar. At 19:45 GMT, the Final Services PMI for December was released, indicating a drop to 54.8 against the expected 55.2, also putting pressure on the US dollar. At 20:00 GMT, the Factory Orders for November came in at 1.0%, which was up against the expected 0.7%, also supporting the US dollar.
Moreover, some of the daily losses in the gold prices were recovered in the late trading session on Wednesday, as the number of coronavirus cases continues to surge, increasing the fears of global economic recovery. Coronavirus cases in Japan reached a new daily record on Wednesday, with the government facing mounting pressure from health experts, to impose a strict state of emergency for the Tokyo greater metropolitan area.
In Portugal, new coronavirus infections also showed an increase on Wednesday, with the Health Ministry reporting 10,027 new cases, the highest number since the pandemic started. Ontario reported 3,266 new coronavirus cases on Wednesday, bringing the total number of coronavirus cases in the region to 200,626. The province first reached 100,000 total cases on November 20, seven months after the pandemic was declared, but in just one and a half months, the number of infections increased by another 100,000 on Wednesday.
All these fears from the rising number of coronavirus cases, mainly because of the new variant of the coronavirus, helped to limit the losses in the gold prices on the day.
GOLD took a sharp dip, from the 1,958 level to 1,916, as the US dollar rebounded amid the rising US Treasury yields. On the lower side, the metal may find support at the 1,906 level, which is extended by upward trendline support. On the higher side, gold may find resistance at the 1,933 level. The
RSI and MACD suggest a selling bias, but
GOLD could remain bullish over the 1,906 level today. Good luck!
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