Daily Brief, February 03 – Everything You Need to Know About Gold Today!
The precious metal, GOLD, closed at 1,837.89, after placing a high of 1,863.99, and a low of 1,829.41. The gold prices extended their losses on Tuesday, dropping to their lowest level since January 18. The decline in the yellow metal could be attributed to the strength of the US dollar and rising US Treasury yields. The US Dollar Index (DXY) was at its highest level in 8 weeks on Tuesday, returning above the 91 mark for the first time since early December, which supported the greenback and ultimately weighed on the precious metal.
The US Dollar was strong, due to Atlanta Federal Reserve President Raphael Bostic’s latest comments on Tuesday. Bostic said that he was not worried about the US economy overheating, though he does think growth is going to happen faster than many expect. He based this on his assumption that the economy could recover from the coronavirus recession rapidly once vaccinations become more widespread, and as the stimulus being pumped into the economy begins to reach more people in need.
Bostic stated that this recession was unlike anything anyone had ever experienced before, so the recovery was likely to go the same way. He said that many of the recent developments have been positive and we should be open to the possibility that things might happen more strongly than would otherwise be the case. He added that it was hard to pin down exactly how much more help US businesses and families might need from the federal government, with aid from a recent bill still in the pipeline and coronavirus vaccines being distributed.
These positive comments by Bostic boosted the US dollar and weighed heavily on the gold prices on Tuesday. So far, the US Congress has allocated about $ 5 trillion in relief spending for the economy, and the Fed has contributed with near-zero short-term borrowing rates and more than $ 3 trillion in liquidity through its large-scale asset purchasing program, which is referred to as quantitative easing. Now that vaccination programs have started, more fiscal stimulus is probably on its way, and the signs of inflation are slowly starting to pick up, market participants have been asking themselves when the Fed might start pulling back on policy accommodation. The Fed has pledged to keep rates low and liquidity pumping, even if inflation exceeds the central bank’s 2% target modestly.
On Tuesday, the Federal Reserve released its senior loan officer survey, which mentioned that the loan demand and standards for lending continued to stabilize in the fourth quarter of 2020, after the economic freefall caused by the coronavirus pandemic in the second quarter. Fewer banks reported tightening commercial and industrial, commercial real estate and personal loans, although most banks kept standards unchanged. This also helped the US dollar, dragging the gold prices further to the downside. On the data front, at 20:00 GMT, the IBD/TIPP Economic Optimism came in, showing a rise to 51.9, against the expected 51.0, which supported the US dollar and ultimately weighed on the declining gold prices.
Daily Technical Levels
Support Resistance
1,851.74 1,876.04
1,839.57 1,888.17
1,827.44 1,900.34
Pivot Point: 1,863.87
Gold is trading with a bearish bias at 1,841, holding below an immediate resistance area of 1,844. Breakout of the support level of 1,833 could extend the selling trend until 1,843. On the higher side, a bullish breakout at 1,844 could extend the buying trend until the next target level of 1,853. The 50 periods EMA suggests a bearish bias for gold today. Good luck!
ABOUT THE AUTHOR
See More
Add 3442
Related Posts
Add 3440
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals
Top Broker