Daily Brief, Jan 29 – Everything You Need to Know About Gold Today!

Good morning traders,

The GOLD prices closed at 1,842.48, after placing a high of 1,864.05, and a low of 1,833.93. Initially, GOLD tried to reverse its direction, reaching above $ 1,864, but it failed to remain there and started to decline, posting losses for the day.

On Thursday, the GOLD prices eased as investors opted for the US dollar, due to the relative shelter it offers from the fading risk-on market sentiment. Another factor that encouraged this move was the worry expressed by the US Federal Reserve over the slow pace of economic recovery. In its January meeting, the Federal Reserve said that the pace of recovery in US economic activity and employment had been moderate in recent months, but it kept its key interest rates and monthly bond purchases unchanged nevertheless. The US dollar hovered near a one-week high in the previous session, after a sharp sell-off on Wall Street on Wednesday, and European equities hit a one-month low in early Thursday trading.

The GOLD prices came under more pressure on Thursday, as the $ 1.9 trillion US coronavirus stimulus package proposed by Joe Biden had still not received the green light from the Republicans. This delay in further relief aid from the US government reversed the GOLD prices.

On the data front, at 18:30 GMT, the Advance GDP for the quarter dropped to 4.0%, against the expected 4.2%, weighing on the US dollar and capping any further losses in GOLD. Last week, the Unemployment Claims dropped to 847K, against the projected 880K, supporting the greenback and adding to the losses in the GOLD prices. For December, the Goods Trade Balance dropped to -82.58B, from the expected -83.4B, supporting the US dollar and dragging the yellow metal further to the downside.

The Prelim Wholesale Inventories for December also dropped, coming in at 0.1%, against the expected 0.5%, which lent support to the US dollar and weighed on the GOLD prices. At 18:32 GMT, the Advance GDP Price Index for the quarter came in, showing a drop to 2.0% against the expected 2.2%, which weighed on the US dollar. At 20:00 GMT, the CB Leading Index for December was released – it came in line with the expectations of 0.3%. The New Home Sales in the US for December dropped to 842K, against the expected 860K, putting pressure on the US dollar and ultimately capping any further losses in the prices of the yellow metal.

The US Dollar Index, which measures the value of the greenback against a basket of six major currencies, went down by 0.3% on Thursday, returning all of the gains of the previous session. This supported the GOLD prices in the earlier trading hours, but gold reversed in the second half of the day. The decline in the GOLD prices could also be attributed to the rising 10-year US Treasury bond yield, which increased by about 5% on Thursday – its first jump in four days. This ultimately weighed on the prices for the precious metal, and GOLD ended up posting losses for the third consecutive session.

However, the latest speech by Fed Chair Jerome Powell could help gold in the coming days. Powell said that the economy was a long way from the Fed’s goals, and that talk of tapering was premature. Despite Powell ruling out any tapering in easing measures any time soon, and President Biden’s push for his $ 1.9 trillion stimulus package, the GOLD prices remained largely without direction, following the consolidative trends of the past few days on Thursday.

Daily Technical Levels
Support           Resistance
1,831.70           1,854.80
1,818.50           1,864.70
1,808.60          1,877.90
Pivot Point:     1,841.60
Trading in GOLD is choppy, at the 1,844 level, and it’s looking to violate the resistance level of 1,845. Above this, the pair has a chance of soaring until the next target level of 1,855, while support continues to hold at around 1,839. A bullish bias dominates. Stay tuned!