Daily Brief, February 08 – Everything You Need to Know about Gold on Monday!

Good morning traders,

Prices for the precious metal, GOLD, closed at 1,814.00, after placing a high of 1,815.12 and a low of 1,791.93. The yellow metal prices broke their four-day-bearish streak, rising on Friday despite the US dollar and US bond yields on the day. On Friday, the yellow metal prices rose above the $ 1,800 level again, after tumbling beneath the key support level one day previously. The comeback of the GOLD prices on the last day of the week could be attributed to the weak jobs report from the US.
Another reason behind the return of the yellow metal prices was the latest move by the US senate. On Friday, the senate passed a budget resolution that will allow the Democrats to pass President Joe Biden’s $ 1.9 trillion pandemic relief package without Republican support. This step closer to a new round of relief aid to Americans from the recently inaugurated government weighed on the US dollar and supported the yellow metal prices on Friday. Earlier in the week, the House had already passed a budget resolution, but it first has to be reconciled with the senate version. US President Joe Biden has reached out to Republicans on the coronavirus package and warned that he is willing to act without them. Biden said that the government must act with urgency, as the pandemic continues to affect the economy, with  more than 450,000 coronavirus-related deaths in the US already.

On Friday, the World Health Organization (WHO) said that the number of people in the world who have been vaccinated against the coronavirus so far has surpassed the number of people being infected by the virus. However, the WHO also stated that although it is a remarkable achievement, only 10 countries have seen this progress so far.

The Director-General of the WHO, Tedros Adhanom Ghebreyesus, said that almost three-quarters of the doses that have been administered so far have been given in just ten countries. He added that some countries had already assured a lower risk of severe disease or death, as they have already vaccinated large proportions of their populations.

On the data front, at 18:30 GMT, the Average Hourly Earnings came in, indicating a drop to 0.2%, against the expected 0.3%, which weighed on the US dollar and pushed the GOLD prices higher. The Non-Farm Employment Change also went down, dropping to 49k, against the expected 85K, which dragged the US dollar down, and supporting the upward momentum in the GOLD prices. In January, the Unemployment Rate dropped to 6.3%, against the expected 6.7%, which boosted the US dollar, and capped any further increase in the GOLD prices. The Trade Balance for December came in line with the expectations of -66.6B.

On Sunday, US treasury Secretary Janet Yellen said that it was too soon to say whether new policies or regulations were needed to deal with the recent market volatility. She said that before making any suggestions, they needed to understand what was happening, and for this purpose, the Security and Exchange Commission (SEC) was working hard to compile a report. The Monday market will reflect the reaction to this report in the GOLD prices.

Daily Technical levels
Support               Resistance
1,771.96               1,823.06
1,752.73               1,854.93
1,720.86              1,874.16
Pivot Point:        1,803.83

Gold is expected to continue its bullish trend until 1,819, which marks the 38.2% Fibonacci level, and above this, the next target is likely to remain at the 50% Fibo level of 1,829. The recent bullish engulfing candle on the four hourly timeframes also supports an upward movement in the market. Let’s consider buying over the 1,807 level on Monday. Good luck!