Daily Brief, January 21 – Everything You Need to Know About Gold Today! - Forex News by FX Leaders

Daily Brief, January 21 – Everything You Need to Know About Gold Today!

Posted Thursday, January 21, 2021 by
Arslan Butt • 3 min read

During Thursday’s Asian trading session, the yellow metal extended its previous three-day winning streak. It hit a two-week high close to the $ 1,900 level, mainly due to the increasing hopes of a massive US stimulus package under the administration of the newly inaugurated president, Joe Biden, which tends to undermine the safe-haven greenback and contributes towards the gains in the yellow metal, as the price of gold is inversely related to the price of the US dollar. Meanwhile, the fears of a hike in coronavirus related deaths and infections and China’s recent sanctions on 28 US Americans has also lent some support to the safe-haven yellow metal, helping it to stay bid.

On a different page, the increased hopes for massive US stimulus measures under the new administration of the recently inaugurated president, Joe Biden, decreased the demand for safe-haven assets, which has become a key factor that has kept a lid on any additional gains in GOLD. Another factor that could also be capping the gains for the safe-haven assets are the latest report suggesting that scientists in Oxford are developing new versions of their vaccines to fight emerging strains of the coronavirus. At the time of writing, the yellow metal was trading at 1,873.86, and consolidating in the range between 1,867.07 and 1,874.85.

The market trading sentiment has been flashing green since the week started, printing a four-day winning streak. This was witnessed after the record high S&P 500 Futures refresh in the mid-3,800s. However, the reason for this could be associated with the long-lasting optimism over the potential vaccines/treatments for the highly infectious coronavirus. Furthermore, the hopes for massive US stimulus measures under the administration of the newly inaugurated Joe Biden also played a major role in underpinning the market trading sentiment. After taking control of the Oval Office, Joe Biden wrote multiple executive orders to meet his pre-election promises from day one. His push for further stimulus and a clear strategy to control the coronavirus (COVID-19) helped the market trading sentiment to stay bid.

Across the ocean, the buying interest surrounding the equity market picked up further pace following the news that scientists in Oxford are willing to develop new versions of their vaccine to combat emerging coronavirus strains. Meanwhile, the World Health Organization (WHO) also supports the faster rollout of the COVID vaccines, and this is also improving the market sentiment.

As a result of the risk-on mood, the broad-based US dollar failed to gain any positive traction, remaining bearish for the third consecutive day. It is worth recalling that heightened hopes for massive US stimulus measures under the new Biden administration undermined the demand for safe-haven currencies. As a result, the losses in the greenback were seen as a key factor that is helping the gold prices to stay bid, due to the inverse relationship between the price of gold and the value of the US dollar. Meanwhile, by 11:26 PM ET (4:26 AM GMT), the US Dollar Index, which tracks the greenback against a bucket of other currencies, had dropped by 0.19% to 90.300.

Elsewhere, the bullish bias of 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 UK hit a record high overnight. In addition to this, the extended lockdown in Germany keeps challenging the upbeat market trading sentiment and contributing to the gains in gold. On the Sino-US front, the Dragon Nation has released a list of 28 US individuals, most of whom are Trump team members, who are to be sanctioned. This has raised further tension between the world’s two biggest economies.

Looking forward, the market traders will keep their eyes on updates from the Biden administration. Meanwhile, the European Central Bank’s (ECB) monetary policy will also be key to watch. In addition to this, the usual risk catalysts, like geopolitics and the virus woes, will not lose their importance.

Daily Support and Resistance
S1 1779.13
S2 1819.05
S3 1845.51
Pivot Point 1858.97
R1 1885.43
R2 1898.89
R3 1938.81

GOLD has violated the intraday resistance level of 1,862. On the higher side, the continuation of a bullish bias is expected, and it could lead gold prices towards the next resistance level of 1,898, while on the lower side, the precious metal, gold, could find support at the 1,862 level—the formation of Doji a candle indicates the next slight bearish correction before extending a bullish trend in gold. 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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