Gold eases on the back of a stronger dollar, still on track for best week in three
· Gold eased on Friday as the dollar and Treasury yields edged higher, but prices were on course for their best week in three as hopes of more U.S. stimulus underpinned the metal.
· Spot gold dipped 0.3% to $1,820.73 per ounce by 0245 GMT. Prices were up 0.5% so far this week. U.S. gold futures slipped 0.3% to $1,821.10.
· “The U.S. jobs numbers sort of talked some sense of inflation risk out of the market and that may have weighed on gold,” said IG Market analyst Kyle Rodda.
· U.S. jobless claims fell slightly last week but were stuck at elevated levels.
· “The bigger picture should be positive for gold because of the current monetary and fiscal policy mix, but despite all the tailwind gold’s just grinding lower, so it’s not a very constructive view for the time being,” Rodda said.
· Trading remained muted as many parts of Asia remained closed for the Chinese new year holiday.
· The dollar and benchmark 10-year U.S. Treasury yields ticked higher, reducing gold’s appeal.
· U.S. President Joe Biden plans to ask Congress this month to invest heavily in infrastructure after his $1.9 trillion Covid-19 aid package makes its way through.
· Gold remains supported “as the specter of stimulus measures in the U.S. rises,” ANZ analysts said in a note.
· Gold Price Analysis: XAU/USD struggles near multi-day lows, below $1820 level
Gold maintained its offered tone through the early European session and was last seen trading near four-day lows, just below the $1820 level.
The precious metal extended this week's rejection slide from the very important 200-day SMA and witnessed some heavy selling for the second consecutive session on Friday.
From a technical perspective, sustained weakness below the $1826-25 region might have already shifted the near-term bias back in favour of bearish traders. Some follow-through selling below the $1818 level will add credence to the negative outlook and turn the XAU/USD vulnerable to retest the $1800 mark. The downward trajectory could further get extended towards two-month lows, around the $1785 region touched on February 4, and November 2020 swing lows near the $1764 zone.
Friday's US economic docket highlights the only release of the Michigan Consumer Sentiment Index for February and might influence the USD price dynamics. Traders might further take cues from the US bond yields and the broader market risk sentiment to grab some short-term opportunities on the last day of the week.
· XAU/USD eyes key $1803 support amid US dollar strength – Confluence Detector
Gold (XAU/USD) remains under pressure while below the $1850 level, with the $1800 support back in sight amid a lack of new developments on the US fiscal stimulus. Renewed US-China tensions combined with fresh coronavirus lockdowns dent risk appetite, boosting the haven demand for the US dollar across the board.
The rebound in the US Treasury yields and surge in the platinum group metals (PGM) further weigh on gold prices. How is the bright metal positioned on the charts?
Gold Price Chart: Key resistances and supports
The Technical Confluences Indicator shows that gold could meet initial support at $1818, which is the Fibonacci 38.2% one-week.
The previous month low of $1803 will be next on the sellers’ radars. Further south, $1775 (the previous week low) could be challenged.
The pivot point one-month S1 at $1778 would be the last line of defense for the XAU bulls.
Alternatively, recapturing the $1833 barrier, the confluence of the SMA10 one-day and Fibonacci 38.2% one-day, is critical to reviving the recovery momentum towards $1842 (Fibonacci 23.6% one-month), the next upside target.
The next bullish target awaits at $1858, the intersection of the SMA200 one-day and pivot point one-day R2.
· Gold Price Prediction – Prices Ease as Yields Rise
Gold prices moved lower on Thursday as the dollar consolidated and US yields moved higher. This rise in yields came despite a softer than expected US jobless claims report. Prices continue to trade in a very tight range while momentum has consolidated.
Technical analysis
Gold prices moved lower after testing resistance near the 50-day moving average at 1,857. Prices pushed through support near the 10-day moving average at 1,832. Additional support is an upward sloping trend line that comes in near 1,788. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD has whipsawed and is now flat to neutral.
· Gold Price Analysis: XAU/USD tracks S&P 500 Futures to south amid mild risk off mood
Gold prices drop 0.25% to $1,821.98, intraday low of $1,821.48, during early Friday. In doing so, the yellow metal declines for the second day as risks dwindle amid mixed catalysts.
Among the positives was New Zealand’s expected delivery of the coronavirus (COVID-19) vaccine by a month as well as US President Joe Biden’s push for the vaccines gained major attention. Also on the same page is the progress over the US covid stimulus plan wherein President Biden is to meet a group of Republicans while House Speaker Nancy Pelosi eyes late-February rollout.
Additionally, chatters surrounding the UK’s anticipated boom after the covid and receding virus infections favor the risks.
On the contrary, no sign of a reduction in the virus cases in the elderly pushes Japan to extend activity restrictions in 10 regions while Australia’s Victoria may also announce a fresh lockdown amid cases of virus variants. Further, Thursday’s telephonic call between the Presidents of the US and China keeps the old terms and reignited geopolitical fears. China is also battling with Australia and the UK and the same sour the sentiment.
Amid these plays, S&P 500 Futures fail to keep the previous day’s upside momentum while declining for the third day in a week, currently down 0.15% to 3,906. Also portraying the sober mood could be Japan’s Nikkei 225, -0.45%, as well as the US 10-year Treasury yields, mostly unchanged around 1.16%.
Although China’s absence restricts the market moves, chatters over the US aid package and virus updates will join US Michigan Consumer Sentiment data to entertain momentum traders.
· Physical gold demand increases in China due to Lunar New Year
Chinese Lunar New Year will be celebrated on Friday, 12 February. Gold is a traditional gift in the nation and there has been some increased demand in 2021 as a result. It has been reported that Chinese physical gold dealers charged premiums of $0.50-$5 an ounce over benchmark spot gold prices.
Ronald Leung, chief dealer for Lee Cheong Gold Dealers in Hong Kong said Demand is “a little better due to the Lunar new year,” adding premiums could rise further if prices remain low following the holiday.
Gold rates at the highest scale flipped to a premium for the first time in 11 months mid-January, as demand showed signs of recovery from a pandemic-induced slump. This was evident as in Hong Kong, dealers sold bullion between a discount of $2.50 an ounce and a $2 premium.
Gregor Gregersen, founder at Singapore dealer Silver Bullion confirmed this by stating “We’re starting to see premium increases from some refineries and bulk suppliers for gold and silver bars,” pointing to supply tightness.
· Silver fell 0.2% to $26.89 and palladium was steady at $2,344.38.
· Spot platinum fell 1.9% to $1,211.01 an ounce as investors booked some profits after prices scaled an over 6-year peak of $1,268.88 on Thursday.
· But the autocatalyst metal was set to post its best week since early December, with a gain of 7.6%.
· “Sentiment remains strong,” ANZ said, adding stricter global emission rules and a disruption at a major refinery in largest producer South Africa should keep the metal in deficit this year.
Reference: CNBC, Kitco, FXStreet, FXEmpire
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