Daily Brief, January 14 – Everything You Need to Know About Gold Today!
Arslan Butt • 2 min read
GOLD prices closed at 1,844.88, after placing a high of 1,862.98, and a low of 1,841.82. On Wednesday, the GOLD prices fell as the US dollar recovered and the US yields held close to recent highs, with investors awaiting more details on American fiscal stimulus measures. The GOLD prices climbed during the early trading hours on Wednesday but could not surpass the $ 1,862 level, and they started to decline after the recent hike in US bond yields. The yield on a 10-year note hovered close to the 10-month highs, and the US Dollar Index was also up by 0.2%, which ultimately put pressure on the GOLD prices, making it more expensive for holders of other currencies.
The GOLD prices could move either way until the uncertainty regarding the fiscal stimulus fades away. The risk to the downside for GOLD has increased, as concerns about inflation expectations and a firmer dollar have been weighing on it. US President-elect Joe Biden has also said that, on Thursday, he will unveil a plan to inject the coronavirus-hit economy with trillions of dollars in relief measures. Gold is seen as a hedge against inflation and the currency debasement that could result from large stimulus measures.
US Federal Reserve officials expect a quick economic recovery if coronavirus vaccinations gather pace, but that could leave markets guessing about the monetary policy outlook of the central bank. The Fed might not resort to faster-than-expected tapering of coronavirus stimulus efforts. Such tapering could put pressure on the Fed to raise interest rates, which currently stand close to zero, faster than expected. Furthermore, the US dollar came under pressure on Wednesday, as investors responded to a House vote on the impeachment of President Donald Trump, for a second time, just days before he relinquishes power to President-elect Joe Biden on January 20.
The Democratic-controlled House was expected to vote late on Wednesday, regarding Trump’s impeachment for his apparent role in sparking a violent attack on the US Capitol. Trump was impeached by the House once before, in December 2019, for abuse of power and obstruction of justice, but he was acquitted by the Senate. These political developments kept the US dollar under pressure and capped any further losses in the yellow metal prices.
At 18:30 GMT, the Consumer Price Index for December came in, remaining flat at 0.4%. The Core CPI for December also came in line with the expectations of 0.1%. Moreover, on Tuesday, the daily coronavirus death-toll in the United States hit a record of 4,327, as the Trump administration moved to accelerate the roll-out of vaccinations across the country. The daily death toll in the US first surpassed 4,000 on January 8, amid a market increase, following a holiday season that prompted widespread travel.
With a total of 382,624 deaths, the US has the highest death toll in the world, and it has also reported the highest number of infections, with 22,959,610 confirmed coronavirus cases. Despite lockdowns and restrictive measures, the rising number of cases put pressure on the US dollar, capping any further losses in gold.
Pivot Point: 1,848.00
GOLD is trading bearishly at the 1,839 level, falling below the resistance levels of 1,853 and 1,863. On the lower side, the precious metal GOLD is likely to find support at 1,833. Violation of this level could open additional room for selling until the 1,820 level today. The 50 periods EMA and RSI support a selling bias. However, the lack of economic events is keeping the market choppy, between the 1,843 and 1,829 levels. Good luck!
About the author
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.