Gold extended the bounce from six-week lows on Tuesday, finishing Wednesday, with moderate gains well above the $1850 level. On Wednesday, the yellow metal gathered pace to test the $1872 hurdle ahead of US CPI reports.
Gold prices fell back again in London trade Tuesday, retreating $20 from a rally to $1863 per ounce before steadying as Western stock markets fell once more against a backdrop of worsening Covid infection and death rates, supply-chain issues with mass vaccinations, but also a rise in longer-term interest rates in the bond market ahead of the “trillions” in new borrowing due from incoming US President Joe Biden’s spending plans.
Following last Wednesday’s violent attack on the US Congress by a mob backing Donald Trump, a ‘source’ at the FBI warned of further protests and terrorism by pro-Trump supporters at next week’s inauguration of Biden as President.
Trump is being pressured to resign and yet there is no response from him. However as mentioned, Biden has reassured that there would be additional stimulus coming in. A Fed Government stated good US growth prospect and bond purchase program.
It is expected that Biden will push a financial package of $2 trillion as possible as soon as he comes to power, a report that many suggested. While this is on, 50 States in the US have been put under server alert on 20th January during Biden’s oath ceremony, as President Trump continues to remain defiant and put up a small remark for his supporters.
Gold drifted higher in quiet mid-week trading, with the $1850 looking like the support level – at least for now. It was up $3 at $1860 during Thursday’s trading session. Generally speaking, the markets are in the quiet mode this morning, with nothing standing out save the latest chapter in the unfolding saga in Washington.
Gold came into a difficult phase as it comes to $1830-$1835 final support. Since bond yields are staying positive and USD again attempting 90.4, it’s a big hardship for gold bulls.
For traders it’s imperative to hold $1822.9. A final stop and support bands of $1830-$1836, once it’s done, gold will fast move to $1855-1865 confirmed Prithviraj Kothari of RSBL.
Right now, gold has a strong support at $1,820 and that is because the expected stimulus package will increase the inflation rate which is significantly important for gold prices.