Daily Brief, March 03 – Everything You Need to Know About Gold Today! - Forex News by FX Leaders

Daily Brief, March 03 – Everything You Need to Know About Gold Today!

Posted Wednesday, March 3, 2021 by
Arslan Butt • 2 min read

Good morning fellas,

Prices for the yellow metal, GOLD, closed at 1,738.09, after placing a high of 1,739.05, and a low of 1,707.18. After five consecutive days of losses, gold finally reversed its momentum on Tuesday, placing gains as the US dollar and the US Treasury yields retreated, lifting the demand for the safe-haven yellow metal. The US Dollar Index (DXY) declined by 0.3%, after hitting the highest level against its rivals in nearly four weeks, making the yellow metal less expensive for holders of other currencies. On a 10-year note, the benchmark US yields also fell from their highest level in one year, and stocks dipped after rising on Monday. All these developments weighed on the risk-sentiment in the market, and the gold prices gained on Tuesday as a result. Meanwhile, on Tuesday, Fed Governor Lael Brainard said that the US economic outlook had improved noticeably, given the impact of fiscal spending and coronavirus vaccines; however, the Federal Reserve will need to be patient and make sure that employment and inflation goals are on track before allowing for policy changes.

She said that the Fed was committed to keeping their monetary policy loose until inflation rises and US jobs lost during the pandemic are restored. Brainard said that the jump in prices this spring might be temporary and will not be enough to warrant action by the US central bank. She said that a sustained improvement in actual inflation would be required for the Fed to act, as the past decade of underperformance on inflation targets shows that reaching a 2% inflation level requires patience. Similarly, with regard to meeting the employment goals, Brainard says that the labor market has a long way to go, as there is not just a gap of 10 million lost jobs to be filled – the decline in labor force participation needs to be reversed as well. These comments by the Fed Governor put further pressure on the US dollar, helping the gold prices to gain further on Tuesday.

On the data front, at 20:00 GMT, the IBD/TIPP Economic Optimism for March came in, indicating a rise to 55.4, against the expected 52.1, supporting the US dollar and capping any further gains in the yellow metal prices. The Wards Total Vehicle Sales in the US for February declined to 15.7M, against the expected 16.4M, which weighed on the US dollar and ultimately added further to the gains in the yellow metal prices.

Furthermore, US President Joe Biden said on Tuesday that the US proposes to deliver enough coronavirus vaccine for all adults by the end of May, which is two months earlier than originally planned. He instructed the states to give teachers at least one vaccine shot by the end of March, so that schools can be reopened. He also announced that Merck would partner with its rival Johnson & Johnson to help produce the newly approved one-shot vaccine. Biden’s optimistic comments raised expectations for a safe emergence from the pandemic and added strength to the US dollar, thereby capping further gains in the yellow metal prices on Tuesday.

 

Daily Technical Levels
Support               Resistance
1,713.64               1,747.79
1,692.12               1,760.42
1,679.49               1,781.94
Pivot Point:         1,726.27

The GOLD price bounced off over the 1,715 area, to reach the 1,733 mark. On the higher side, the precious metal is likely to face resistance at 1,754, which marks the 38.2% Fibonacci retracement mark. A bullish breakout at this level could extend buying until the next target level of 1,777, which is the 61.8% Fibonacci level. A bullish bias dominates today, over 1,726.27. Let’s keep an eye on it. 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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