Daily Brief, Jan 28 – Everything You Need to Know About Gold Today!

The precious metal, GOLD, closed at 1,843.93, after placing a high of 1,853.02, and a low of 1,831.12. On Wednesday, the GOLD prices followed their bearish trend of the previous day, extending their losses, as investors awaited the Federal Reserve policy decision. The Fed was expected to keep US monetary policy locked in crisis-fighting mode, as policymakers assessed an economy that was still struggling through the shock of a pandemic, but looking forward to relief from ongoing vaccination programs and new government spending plans.

The Fed has rolled out significant changes to the US policy over its last few meetings, as it has linked any future increase in interest rates to a persistent rise in inflation, and tied any change in its $ 120 billion in monthly bond purchases to substantial further progress on its employment and inflation targets.

Many of the steps that the Fed took last year, in response to the onset of the recession, including slashing interest rates to near-zero levels, are expected to remain in place for a potentially extended period. Policymakers were not anticipating the need to raise interest rates for perhaps three years. These decisions by the Fed were designed to help push the economy onto the path of both higher employment and the Fed’s 2% inflation target. The Fed is expected to hold onto interest rates. Still, Fed Chair Jerome Powell’s comments will provide basic clues about the movement of the US dollar, that will eventually drive the market sentiment accordingly, and that is why investors were cautious ahead of any Fed decision, and continued selling GOLD on Wednesday.

Powell is expected to maintain his dovish tone by stating that inflation will remain below the Fed’s 2% annual target. The employment rate was still about 10 million short of its pre-pandemic level. These dovish comments by the Fed chair, despite the vaccine rollout and improved business activity, could weigh on the market sentiment and strengthen the yellow metal.

Meanwhile, about 25 million people had received at least one of the required two vaccine doses as of Sunday, and President Biden said that he was hopeful that the daily shots would be boosted to a pace of 1.5m. He has also requested an additional $ 1.9 trillion in government spending, to speed up the vaccination process and expand the benefits available to households and businesses. Since the approval of the first coronavirus vaccines in December, Fed officials have shared a general view that the US economy was possibly entering the endgame of the pandemic. However, officials have also noted that a large hole has been left in the economy, particularly in the job market, after a year that saw activity crash dramatically last spring, and so far, it has only come back partially, due to the ongoing health crisis.

On the data front, at 18:30 GMT, the Core Durable Goods Orders for December came in, showing an increase to 0.7%, against the forecast of 0.5%, which supported the US dollar and added further to the losses in gold. In December, the Durable Goods Orders declined to 0.2% against the projected 1.0%, weighing on the US dollar and capping any further downside for the yellow metal.

Furthermore, on Wednesday, US President Joe Biden’s nominee for ambassador to the United Nations, Linda Thomas-Greenfield, stressed the importance of US re-engagement, with the 193-member world body, in order to challenge China’s efforts to drive its authoritarian agenda.

Beijing has been pushing for greater global influence in a challenge to traditional US leadership. The tension between the two superpowers hit boiling point at the United Nations last year, over the coronavirus pandemic. Thomas-Greenfield said that the United States needs to re-engage broadly with its allies and adversaries, and criticized the Trump administration for trying to go it alone, particularly regarding the failed efforts to get North Korea to give up its nuclear weapons program.

She also added that Washington needed to pay its dues to the world body, to enable continued exertion of its influence. The United States, which was formerly the largest contributor to the UN, is currently in debt to the tune of about $ 600 million for the regular budget and about $ 2 billion for the peacekeeping budget.

The rising tensions between the US and China raised the safe-haven appeal and limited the losses in the yellow metal on Wednesday.

Daily Technical Levels:
Support               Resistance
1,845.14              1,858.74
1,839.37              1,866.57
1,831.54              1,872.34
Pivot Point:        1,852.97

GOLD is trading with a bearish bias at 1,837, violating the support level of 1,848, and it’s likely to head further down until 1,830 and 1,824. The 50 periods EMA suggests a selling bias in gold, as it is extending resistance at 1,848. On the higher side, GOLD may find resistance at 1,848 and 1,857. A selling bias dominates. Good luck!