Gold gains as dollar eases off four-week high
· Gold prices rose on Tuesday, off a 1-1/2-month low hit in the previous session, as the dollar slipped and hopes for further global stimulus underpinned the safe-haven metal.
· Spot gold rose 0.2% to $1,840.81 per ounce by 0226 GMT, recovering from its lowest since Dec. 2 at $1,809.90 hit on Monday. U.S. gold futures gained 0.5% to $1,839.40.
· “The key factor appears to be the (U.S.) currency. The movements in the U.S. dollar have been the best predictor of gold market moves in recent days,” said Michael McCarthy, chief market strategist at CMC Markets.
· Making gold attractive for other currency holders, the dollar fell from a four-week high hit in the previous session.
· Benchmark 10-year Treasury yields were range-bound, but held above 1%. Higher bond yields increase the opportunity cost of holding the non-interest yielding gold.
· “Bond markets are clearly sitting on a change in conditions, and we might have seen the lows for interest rates for this cycle ... that will be the key consideration for gold traders this year,” McCarthy said.
· The next round of fiscal stimulus in the United States was also in focus with President-elect Joe Biden’s $1.9 trillion stimulus package proposal to jump-start the virus-stricken economy. Biden is set to be inaugurated on Wednesday.
· Euro zone finance ministers also pledged continued fiscal support for their economies and discussed the design of post-pandemic recovery plans.
· Gold is considered a hedge against inflation and currency debasement, likely to result from large stimulus measures.
· Global coronavirus cases stood near 95 million with several countries still under tight restrictions and a tepid pace of vaccinations.
· Gold $ spot: might we see a temporary rally?
A BULLISH bias is applicable above 1839.
Trade setup probability: +41%. Target: 1862. Stop-loss: 1827.
Upside price momentum supports the bullish trend direction. RSI is at 41 – leaving room for further upside price potential. Remains just below its 200-day simple moving average .
Investors await comments from Secretary of the Treasury nominee Janet Yellen, on US stimulus measures and the dollar during her Senate confirmation hearing later in the day, said on Peet_Serfontein.
· SILVER, XAG/USD, US DOLLAR, YELLEN TESTIMONY – TALKING POINTS
Silver is moving higher ahead of Treasury Secretary nominee Janet Yellen’s confirmation hearing before the Senate Finance Committee. XAG/USD is extending gains from Monday after falling to a fresh multi-week low. The weakness in silver prices through the opening weeks of the year was largely driven by US Dollar strength. The lull in precious metal prices had traders surprised given that the Fed is not expected to raise rates for years to come, which might have been expected to be supportive of gold and silver.
SILVER TECHNICAL OUTLOOK:
Silver pivoted higher from a multi-week low earlier this week following a broader decline rooted in the opening days of the year. The recent move higher has repositioned silver into a more bullish outlook from a technical perspective, but there remains a way to go before reclaiming fresh higher ground. Still, momentum is picking up, with the MACD climbing above its signal line on the four-hour time frame.
The Relative Strength Index (RSI) is also moving higher within neutral territory. Moreover, prices are currently attempting to overcome the 20-period (yellow line) Simple Moving Average (SMA) after rising through the 50% pseudo-Fibonacci retracement level from the November to January move. Further upside will bring the 50-period (blue line) SMA into focus before attacking the 38.2% Fib level. To the downside, possible trendline support along with the 50% pseudo-Fib level may offer support.
· Among other precious metals, silver fell 0.5% to $25.21 an ounce. Platinum rose 1.5% to $1,095.74, while palladium climbed 0.2% to $2,376.93.
Reference: CNBC, DailyFX, Trading Veiw
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