Good morning traders,
Prices for the yellow metal,
GOLD, closed at 1,843.31, after placing a high of 1,856.71, and a low of 1,816.91. The
GOLD prices dropped on Monday but recovered almost a quarter of what they lost in last week’s massive selling, which was driven by the rising US Teasury Yields.
GOLD prices continued falling on Monday morning, and extended their losses during the early trading hours, following a slump of more than 4% during the previous session, due to the strengthening dollar and the US Treasury Yields, which remained elevated on Monday. President-elect Joe Biden has said that his first order after taking office on January 20 will be to send out $ 2,000 checks to most Americans, as coronavirus relief. He has also said that he has plans to release at least two more comprehensive stimulus packages, which could add trillions to the US federal debt, which is estimated at $ 3.8 billion for 2020. Despite all these stimulus hopes, the US dollar remained higher throughout the week, thanks to the rising treasury yields.
The US Treasury Yields remained higher on Monday, due to the expectations of more federal spending to aid the coronavirus-hit economy, after the release of higher-than-expected jobless claims on Thursday. The initial jobless claims came in at 787,000 last week, amid raised prospects of more aid to the economy from the incoming Democratic President Joe Biden, which supported the greenback and raised the US Treasury Yields.
President-elect Joe Biden said that Friday’s data showed that Americans need more immediate relief, and that acting now will help the economy, even with deficit financing. He has pledged to draw up proposals for trillions of dollars in fiscal support in the coming week, in order to fight the economic toll of the coronavirus.
Meanwhile, the calls for Trump’s impeachment escalated after he incited riots by his supporters on Capitol Hill last week. This caused the market sentiment to soar. In Washington DC, the speaker of House of Representatives, Nancy Pelosi, led calls for Vice President Mike Pence and the cabinet to remove Donald Trump from office before moving on to impeachment. These developments kept the US dollar under pressure and supported the GOLD prices, helping them to recover their daily losses.
Furthermore, the President and chief executive officer of the Federal Reserve Bank of Atlanta, Raphael Bostic, said on Monday that interest rates could rise sooner than predicted, as the economy is recovering faster than expected from the damage caused by the coronavirus.
The Fed had previously hoped that rates would remain unchanged until at least 2023. However, Bostic thinks that the emergency measures the Fed has taken to combat the effects of the pandemic could start to be rolled back within the next two years, if not sooner. These comments from Bostic supported the US dollar and weighed on the
gold prices on Monday.However, Federal Reserve Chairman Jerome Powell is expected to deliver a speech on Thursday, and he could reaffirm that interest rates will remain near zero at least through 2023, and that the path of the economy is significantly dependent on the course of the virus.
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
One day ago, prices for the precious metal,
GOLD, fell sharply, to trade at the 1,838 level, having violated the upward channel on the four-hourly timeframes. However, they seem to have recovered a bit, as gold has bounced off over the 1,840 support area, to trade at the 1,857 level today. A bullish breakout at the 1,853 level could send the
GOLD price higher, until the next resistance level of 1,876. A bullish bias dominates. Good luck!
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