Daily Brief, Feb 05 – Everything You Need to Know About Gold Today!
Arslan Butt•Friday, February 5, 2021•2 min read
Good morning traders,
Prices for the precious metal, GOLD, closed at 1,793.77, after placing a high of 1,834.67, and a low of 1,784.95. The prices for the yellow metal extended their losses on Thursday, dropping for the 4th consecutive session to below their lowest level since Dec 01. The GOLD price came under heavy selling pressure, falling below 1,800, amid the signs of US labor market recovery and problems surrounding the Biden administration’s coronavirus stimulus plan. Another reason behind the declining gold prices on Thursday was the strength of the US dollar against almost every currency other than the British Pound.
The rally of the greenback was supported by the rise in US treasury yields, as the returns from the 10-year note hit a one-year high of 1.158%. GOLD came under heavy pressure thanks to the combination of a stronger US dollar and an increase in US Treasury yields.
On Thursday, US President Joe Biden encouraged Democratic lawmakers to act fast on his 1.9 trillion dollar COVID-19 economic relief plan, but also signaled that he was open to changes that included limiting the proposed $ 1,400 direct payment checks to Americans with lower income levels, in an effort to draw the support of the Republican senators.
While Biden is trying to get support from Republicans and build bipartisanship at the same time, he is also prepared to rely on the Democratic majority in Congress to push the packages into law. The Democrats started moving ahead with preliminary steps and voted for a House budget along party lines, in order to approve it on their own, despite the objections from the Republicans.
A group of 10 Republican senators suggested a $ 618 billion alternative, with reduced direct payments of $ 1,000 and no aid for states and cities; however, Biden refused, saying that it was insufficient. The talks and negotiations continue, in an effort to reach consensus between the two parties. The stalemate between Biden and the Republican senators continued to support the risk-off market sentiment, which weighed heavily on the yellow metal prices on Thursday.
On the data front, at 18:30 GMT, the US Unemployment Claims for last week came in, indicting a drop to 779K, against the expected 828K, which supported the US dollar, ultimately dragging the yellow metal onto the downside. The Prelim Nonfarm Productivity for the quarter declined to -4.8%, against the expected -2.9%, supporting the US dollar and adding to the losses in
GOLD.
The Prelim Unit Labor Cost for the quarter rose to 6.8%, against the expected 4.1%, boosting the US dollar, and weighing heavily on the
GOLD prices. At 20:00 GMT, the Factory orders for December increased to 1.1%, against the expected 0.7%, supporting the US dollar and ultimately dragging the
GOLD prices down. After the US weekly jobless claims fell by 4% last week, the US dollar also strengthened and the US Treasury yields rose, which ultimately weighed heavily on the yellow metal prices on Thursday.
Daily Technical Levels
Support Resistance
1,828.16 1,843.96
1,821.23 1,852.83
1,812.36 1,859.76
Pivot Point: 1,837.03
With gold trading at the 1,795 level, the bearish bias in the precious metal continues to dominate the market. Gold has already violated the support level of 1,819, and closing of candles below this level could extend the selling trend until the next support area of 1,784. For now, we may see a slight bullish correction until 1,819, and later the odds of continuation of the selling trend will remain solid. We can expect a continuation of the selling bias until 1,763. A selling trend is likely below 1,810 today. Good luck!
22m
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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