Daily Brief, February 02 – Everything You Need to Know About Gold Today!

Good morning traders,

Prices for the precious metal, gold, closed at 1,860.45, after placing a high of 1,871.75, and a low of 1,848.86. GOLD remained consolidated on Monday, due to the lack of progress regarding the stimulus package and mixed macroeconomic data from the US. During a 2-hour meeting session on Monday, US President Joe Biden told Republican senators that he was unwilling to settle for an insufficient coronavirus aid package, after they pitched their slimmed-down $ 618 billion proposal, which is a mere fraction of the $ 1.9 trillion he is seeking.

The parties were unable to reach a compromise during the lengthy session, which was Biden’s first meeting with lawmakers at the White House. The Democrats in Congress pushed ahead with the groundwork for approving his coronavirus relief plan, with or without Republican votes. The US President made it clear that he will not delay aid in the hopes of winning GOP support, despite the Republican group’s appeal for bipartisanship, as part of Biden’s efforts to unify the country. The two sides were far apart, with a Republican group of 10 senators focused primarily on the health crisis and smaller $ 1,000 direct aid payments to Americans, while the Democrats leaned towards a more sweeping rescue package, three times the size, in an effort to shore up households, local governments and a partly shuttered economy.

On the fast track, the goal was to have coronavirus relief approved by March, when extra unemployment assistance and other pandemic aid will expire. However, no deal could be reached on Monday, and this supported the US dollar, ultimately weighing on the yellow metal on Monday. Meanwhile, new research suggests that several coronavirus vaccines were less effective against a variant first identified in South Africa, and this put pressure on President Joe Biden’s administration to speed up inoculations and enforce basic public health measures, like the wearing of masks.

On Friday, Johnson & Johnson said that its much anticipated vaccine was 66% effective overall at preventing moderate and severe illness. But that figure dropped to 57% in South Africa, where a more transmissible coronavirus variant dominates. Vaccine makers, Pfizer, Moderna and Novavax, also revealed this week, that their shots show reduced potency against the variant. The news that the more transmissible variants have reached the US weighed on Biden’s quest to beat back the pandemic, as the more transmissible variants have made it harder to continue bringing down the number of new infections. However, these concerns supported the yellow metal price, due to its safe-haven status, capping any further losses. On the data front, at 19:45 GMT, the Final Manufacturing PMI for January came in, remaining in line with the expectations of 59.2. At 20:00 GMT, the ISM Manufacturing PMI figures revealed a drop to 58.7, against the expected 60.0, weighing on the US dollar and capping any further downside in gold. In December, Construction Spending rose to 1.0%, against the expected 0.8%, boosting the US dollar and adding to the losses in gold. The ISM Manufacturing Prices also rose, coming in at 82.1, against the expected 72.0, which supported the US dollar and dragged gold even lower.

On Monday, India slashed import duties on gold and silver, in a surprise move that industry officials say could boost retail demand and curtail smuggling in the country, which is the world’s second-biggest bullion consumer. Higher demand from India could support global prices, which hit a record high last year. On Monday, India’s Finance Minister said that the country had cut import duties on gold and silver to 7.5%, from 12.5%. However, it imposed a separate tax of 2.5% on the imports. These hopes for a possible increase in gold prices also supported the yellow metal, capping any further losses in its prices on Monday. However, on Monday, the traders mostly focused on silver, rather than gold, with silver making a big jump, driven by the speculation that Reddit’s investor army of stock buyers had turned some of its attention to silver, after destroying billions of the capital in hedge funds that had shorted GameStop shares. Silver rose by 9%, to its highest level since 2013, stealing all the market limelight on Monday.

Daily Technical Levels
Support               Resistance
1,852.29              1,866.64
1,846.62              1,875.32
1,837.94              1,880.99
Pivot Point:        1,860.97

Gold prices are trading sideways, within a narrow trading range between 1,856 and 1,875. A breakout at the 1,855 support level could extend the selling trend until 1,843. On the higher side, gold may face resistance at 1,875, and a bullish breakout at this level is likely to extend the buying trend until the next target level of 1,895. The MACD and RSI support a bullish bias on the 4-hour timeframe. Let’s keep an eye on the 1,854 support level today. Good luck!