Daily Brief, January 08 – Everything You Need to Know About Gold Today!

The precious metal, GOLD, closed at 1,913.41, after placing a high of 1,927.62, and a low of 1,906.74. The GOLD prices slipped on Thursday, amid the stronger US dollar and higher US Treasury yields. However, the prospect of further fiscal stimulus under a Democrat administration limited any further downside momentum in the GOLD prices. The US Treasury yields on 10-year bonds jumped above 1% for the first time since March, decreasing the demand for the precious metal, as it does not offer any yields. The higher yields in terms of the 10-year US Treasury note pulled some “flight-to-safety money” out of the GOLD market, hence the drop in GOLD prices on Thursday.

The US Dollar Index also rebounded from a multi-year low, weighing on the yellow metal and making it less attractive for holders of other currencies. Although the stronger dollar keeps weighing on GOLD prices, the upside of the greenback is likely to be short-lived, as the prospects of larger fiscal stimulus from the Democratic government still exist.

A Democratic victory in the US Senate runoffs stoked inflation expectations, as investors raised bets for more fiscal stimulus, while the US Congress certified President-elect Joe Biden’s win. The expectations for more generous stimulus support and higher infrastructure spending increased with the double win for the Democrats in Georgia’s runoff US Senate elections.

Meanwhile, on Thursday, the Federal Reserve released the minutes of its FOMC meeting for December, which showed that the Federal Reserve officials unanimously backed holding the pace of asset purchases steady when they met last month, although some of them were open to future adjustments if needed.

The minutes revealed that all the participants agreed that it would be appropriate to continue those purchases at the current pace, and nearly all of them favored maintaining the current composition of purchases. At the meeting, the Federal Open Market Committee held interest rates near zero and strengthened its commitment to bond-buying, after pledging to maintain a monthly pace of $ 120 billion in terms of purchases, until there is substantial further progress towards the employment and inflation goals.

On the data front, at 17:30 GMT, the Challenger Job Cuts for the year in December came in, indicating a rise to 134.5%, compared to November’s 45.4%. At 18:30 GMT, the Unemployment Claims from last week came in, showing a decline to 787K, against the projected 798K, supporting the US dollar and adding to the losses in the GOLD prices. The Trade Balance from November showed a deficit of -68.1B, against the expectations of -66.7B, which weighed on the greenback, capping any further downside in the precious metal prices. At 20:00 GMT, the ISM Services PMI came in, showing an increase to 57.2 in December, cpmpared to the forecast of 54.5, which boosted the US dollar and added further to the losses in GOLD on Thursday.

Furthermore, FOMC member and President of the Federal Reserve of Atlanta, Raphael Bostic, said that the US Federal Reserve might reduce its asset purchase program sooner than expected. These hawkish comments lent strength to the US dollar, and the gold prices suffered even more.

Daily Technical Levels
Support               Resistance
1,906.66              1,928.51
1,896.23              1,939.93
1,884.81              1,950.36
Pivot Point:        1,918.08

GOLD has taken a sharp dip, from the 1,958 level to 1,916, due to the rebound of the US dollar, 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 1,933. The RSI and MACD suggest a selling bias, but gold could remain bullish over the 1,906 level today. Good luck!