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Daily Brief, March 4 – Everything You Need to Know About Gold Today!

Posted Thursday, March 4, 2021 by
Arslan Butt • 2 min read
Good morning traders,
Prices for the precious metal, GOLD, closed at 1,710.81, after placing a high of 1,740.49 and a low of 1,701.87. The GOLD prices suffered for the sixth session in seven days, amid the rising risk sentiment in the market. The US bond yields and the US Dollar Index both rose after US President Joe Biden raised the bar for coronavirus vaccinations on Tuesday. He said that he expected to get all adult Americans immunized against the virus by the end of May, which will be two months ahead of his previous target. The hopes for quicker recovery from the pandemic supported the market risk flows and weighed on safe-haven assets, like the yellow metal.
Some analysts believe that the bearish momentum in gold could reverse if the President’s $ 1.9 trillion stimulus package for the pandemic is passed by next weekend, as he has promised to deliver coronavirus relief checks to the Americas by mid-March. This will give an inflationary bounce to the GOLD prices. On Wednesday, San Francisco Federal Reserve President Mary Daly pushed back against the fear that a loose monetary policy could bring unwanted inflation. She argued that the monetary policy must remain accommodative for some time, as inflation is too low and millions of Americans are still out of work

She added that the labor market should be continually reassessed, and that the tightening of monetary policy should be avoided until millions of Americans have had an opportunity to benefit. The expectations of economic growth have been upgraded for this year, due to optimism driven by a sharp decline in the numbers of COVID-19 infections since January, the progress towards the $ 1.9 trillion pandemic relief package being passed and the US approval of a third vaccine.

However, this has also raised alarm bells over the possibility of a hike in inflation that would force the Fed to reverse the course, in order to bring it down. She also said that the US monetary policy was in a very good place, and a recent rise in the bond yields was a sign that investors see a bright future ahead. These comments by Daly boosted the US dollar, dragging the yellow metal prices down.

On the data front, at 18:15 GMT, the ADP Non-Farm Employment Change for February came in, indicting a drop to 117K, against the expected 203K, which weighed on the US dollar and capped any further losses in gold. At 19:45 GMT, the Final Services PMI for February came in higher at 59.8, against the expected 58.9, supporting the US dollar and adding further downside momentum in gold. At 20:00 GMT, the ISM Services PMI was released, showing a decline to 55.3, against the expected 58.7, which weighed on the US dollar and added further to the gains in GOLD.

Furthermore, on Wednesday, Chicago Federal Reserve Bank President Charles Evans said that he was optimistic about the economic outlook, and in his view, the Fed does not need any further easing as long as Congress passes further fiscal relief. These encouraging comments by Charles also added strength to the US dollar and dragged the GOLD prices down.

Daily Technical Levels
Support               Resistance
1,712.86               1,746.06
1,692.13               1,758.53
1,679.66              1,779.26
Pivot Point:        1,725.33The price of the precious metal, GOLD, hasn’t changed much, as it continues to trade within the same trading range of 1,705 to 1763. GOLD is likely to find immediate resistance at 1,734, extended by a downward channel formed on the four-hourly time-frames. On the lower side, the support remains at 1,706, and violation of this level could extend the bearish trend until the next support area of 1,686. Let’s keep an eye on the 1,706 level today. Good luck!

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