Daily Brief, January 06 – Everything You Need to Know About Gold Today!

Prices for the yellow metal, GOLD, closed at 1,949.87, after placing a high of 1,953.00, and a low of 1,934.18. On Tuesday, the yellow metal hit a two-month high, amid the weakness of the US dollar and growing concerns about the coronavirus, as the investors await the outcome of the US Senate runoff elections in Georgia, that could greatly impact the prospects for more fiscal stimulus. The US Dollar Index fell, coming close to its lowest level of April 2018, making gold an attractive bet for other currency holders. The US dollar was also weak across the board, due to rising coronavirus fears, as the number of cases is increasing day by day. The UK went into a new national lockdown on Monday, as a more infectious variant of the coronavirus fueled a surge in infections and hospitalizations. PM Boris Johnson said that it was clear that they needed to bring the new variant of COVID-19 under control. The number of confirmed daily cases in the UK topped 60,000 on Tuesday, for the first time since the pandemic started.

Meanwhile, Germany has also extended its nationwide lockdown until the end of the month and introduced new, tougher restrictions to curb the surging numbers of coronavirus infections. On Tuesday, German Chancellor Angela Merkel said that they needed to contol contacts more strictly, and that all citizens must restrict their contact with other people to the absolute minimum.

The rising number of coronavirus cases and nationwide lockdowns in many countries, in an effort to control the spread of COVID-19, has raised fears that the global economy is not going to recover any time soon, which in turn has led to an increased demand for safe-havens, ultimately adding to the gains in the prices for the safe-haven precious metal on Tuesday. On the data front, at 20:00 GMT, the ISM Manufacturing PMI for December came in, reflecting an increase to 60.7, against the expected 56.6, which supported the US dollar and capped any further gains in gold. The ISM Manufacturing Prices also surged to 77.6, against the projected 66.0, likewise supporting the greenback. The Wards Total Vehicle Sales rose to 16.3M, against the projected 15.8M, boosting the US dollar and ultimately limiting any further gains in the gold prices. Furthermore, all eyes are on the southern state of Georgia, where the future of the US Senate will be decided this week. The outcome will be crucial with regard to how much the incoming Democratic president, Joe Biden, will achieve in his first term.

According to the state rules, a winning candidate needs 50% of the votes, and in November, no-one achieved that. So the top two candidates go through to a January 05 replay – a so-called runoff. The result of the Georgia runoff will decide which party will control the US Senate, an upper chamber of the US Congress. Control of the Senate plays a major role in getting laws passed, cabinet appointments confirmed and Supreme Court Justices onto the bench of the High Court. If the Democrats win in Georgia, the extra two seats will give them effective control.

The result will be announced on Wednesday, and investors have been highly cautious ahead of this vote. As a result, the GOLD prices were pushed to their highest level since November 09 on Tuesday.

Daily Technical Levels
Support               Resistance
1,942.44              1,961.09
1,931.12               1,968.42
1,923.79              1,979.74
Pivot Point:        1,949.77

GOLD is trading sideways, between 1,939 and 1,952, facing immediate resistance at the 1,952 level. The metal seems to have entered the overbought zone, and now the odds are high that it will show bearish correction. In this case, GOLD may dip until the next support area of 38.2% at 1,930, with the support area of 61.8% remaining at 1,920. Conversely, a bullish breakout at the 1,952 level could lead the GOLD price towards 1,977. Good luck!