Daily Brief, Jan 20 – Everything You Need to Know About Gold Today! - Forex News by FX Leaders

Daily Brief, Jan 20 – Everything You Need to Know About Gold Today!

Posted Wednesday, January 20, 2021 by
Arslan Butt • 3 min read

Today, in the Asian trading session, the yellow metal prices managed to print a two-day winning streak. They refreshed the intra-day high above the mid-$ 1,800 level, as the latest upbeat comments from Secretary of the Treasury-nominee Janet Yellen, calling for more COVID-19 relief spending, helped to lift the market trading sentiment, which in turn undermined the safe-haven US dollar and contributed to the gains in the yellow metal, as the price of GOLD is inversely related to the price of the greenback. Meanwhile, the coronavirus (COVID-19) woes and fears of the vaccine shortages, not to forget the cautious sentiment ahead of Biden’s inauguration festivities, also lent some support that kept the safe-haven yellow metal bid.

In contrast to this, Janet Yellen’s latest calls for big fiscal spending boosted the market trading sentiment, which was seen as one of the key factors that kept a lid on any additional gains in GOLD. At the time of writing, the yellow metal prices were trading at 1,849.90, and consolidating in a range between 1,839.57 and 1,851.12. The traders seem cautious to place any strong positions, amid the cautious sentiment ahead of the key event in the White House today.

The market trading sentiment printed a three-day winning streak, hitting a record high during the Asian trading session, mainly after Yellen pushed for a hefty fiscal relief package, stating that the benefits of increased spending are greater than the costs associated with a higher burden of debt. This, in turn, put a bid under the US stocks and undermined the safe-haven greenback. Moving on, Janet Yellen could be confirmed as the new Secretary of the Treasury as soon as Thursday, and US President-Elect Joe Biden is due to take office later in the day, which has created more courtesy among investors, as they are paying more heed to the blitz of policies promised.

Across the ocean, the better-than-expected ZEW economic sentiment survey in Germany also played a major role in underpinning the market trading sentiment. The bullish tone around the global market sentiment favors the GOLD buyers, thanks to the weakness of the US dollar.

As a result of the risk-on mood, the broad-based US dollar failed to gain any positive traction, remaining bearish for the second consecutive day. It is worth recalling that the upbeat comments by Yellen helped mitigate the risk-averse tone seen earlier in the week and turned investors away from the safe-haven US currency. Therefore, the losses in the greenback were seen as a key factor that helped the GOLD prices to stay bid, as the price of gold is inversely related to the price of the US dollar. Meanwhile, by 9:17 PM ET (2:17 AM GMT), the US Dollar Index, which tracks the greenback against a bucket of other currencies, had dropped by 0.11% to 90.365.

Elsewhere, the bullish bias in the GOLD prices could also be attributed to the long-lasting concerns over the coronavirus (COVID-19) and tussles between the US and China. As per the latest report, the death toll from the coronavirus in the US has crossed the 401,000 mark, and the number of cases in the country exceeded 24 million as of Jan 20. In addition to this, the record daily COVID-related deaths in the UK and the extended lockdown in Germany keep challenging the upbeat trading sentiment on the market and contributing to the gains in GOLD. Meanwhile, the data also shows that the number of cases globally has topped 96 million. The reports of a likely shortage of vaccine in New York and postponement of Pfizer’s delivery of vaccine to Canada could also be questioning the risk-on sentiment.

Looking forward, the market traders will keep their eyes on Biden’s speech in the White House, as it could add to the upside momentum of the commodity. Meanwhile, the inflation data from the UK, Europe and Canada could decorate the calendar ahead. In addition to this, the risk catalysts, like geopolitics and the virus woes, will continue to be significant.

 


Daily Support and Resistance
S1 1769.19
S2 1802.78
S3 1815.73
Pivot Point 1836.36
R1 1849.32
R2 1869.95
R3 1903.53The precious metal, GOLD, has violated the intraday resistance level of 1,845, to trade at the 1,849 level on Wednesday. On the higher side, continuation of the bullish bias is expected and this could lead the GOLD prices towards the next resistance level of 1,857. At the same time, the support level remains at the 1,845 mark. The formation of three white soldiers on the hourly timeframe supports a bullish bias in gold today. Good luck!

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About the author

Arslan Butt // Index & Commodity Analyst
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.
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