The GOLD prices closed at 1,849.43, after placing a high of 1,917.38, and a low of 1,828.18. GOLD prices fell to their lowest since December 15 on Friday, amid the rising US Treasury yields and the strength of the US dollar. On Friday, gold fell by more than 4%, as prospects for a smooth transition of power in Washington increased after political risks in the US faded away. A jump in US Treasury yields, which lent strength to the greenback, also weighed heavily on the precious metal prices. The US Treasury yields on 10-year bonds rose by almost 3% on the day and 21% for the week, heading towards the highest level since March, amid the rising bets for a larger stimulus package from the Democrat controled US Senate.

The gold losses could also be attributed to temporary profit-taking, since US President Donald Trump has agreed to an orderly transition of power. The markets are moving under the impression that President-elect Joe Biden will have the stability of governance, as all three legislative houses, the White House, the House of Representatives and the Senate, will soon be under his Democratic Party’s control.

The incoming President has also hinted that his first order of business might be to issue checks of $ 2,000 to each American hurt by the coronavirus pandemic. Biden has also said that he plans to push out at least two more comprehensive stimulus packages that could add trillions to the US federal debt, which is already estimated at $ 3.8 billion for 2020.

In ordinary times, GOLD has generally be seen as a hedge against the inflation that could result from the widespread stimulus, especially last year, but this has changed this year, as higher bond yields increase the opportunity cost of holding non-interest yielding bullion, which is why GOLD saw a massive drop-off on Friday. On the data front, at 18:30 GMT, the Average Hourly Earnings for December came in at 0.8%, which was up compared to the expected 0.2%, supporting the US dollar and weighing on the GOLD prices. In December, the Non-Farm Employment Change dropped to -140K against the expected 60K, also weighing on the US dollar, and capping any further losses in the GOLD price. During December, the Unemployment Rate fell to 6.7%, against the expected 6.8%, boosting the US dollar and adding further to the losses in the yellow metal. At 20:00 GMT, the Final Wholesales Inventories for November came in at 0.0%, against the expected -0.1%, which put pressure on the US dollar, limiting the losses in the gold prices on Friday.

Meanwhile, on Friday, FOMC member and Vice Chairman of the Federal Reserve, Richard Clarida, said that he expected the central bank to maintain the pace of its bond purchases through 2021. These comments kept the US dollar under pressure and limited further losses in the GOLD prices on Friday.

Daily Technical Levels
Support               Resistance
1,838.80             1,852.95
1,833.10              1,861.40
1,824.65              1,867.10
Pivot Point:        1,847.25

Prices for the precious metal, GOLD, fell sharply, to trade at the 1,838 level, having violated the upward channel on the four hourly timeframe. On the lower side, the precious metal is now gaining support at the 1,820 level. A bearish breakout at the 1,820 level could further extend the selling trend until the 1,773 level above 1,820, and GOLD could retrace upward until the resistance level of 1,860. Good luck!