Gold price attempted to push through the key psychological resistance level of $1,900 an ounce this week but ended up settling just below that on Friday. Gold prices hollowed in on Friday as the decrepit dollar bounced back from 2-½ lows. But that didn’t stop the yellow metal from posting a third straight weekly rise from gains accumulated on bets that the U.S. Congress will soon pass another corona virus fiscal relief.
Gold futures settled with a loss on Friday, but tallied a gain of about 2.5% for the week following a decline in the U.S. dollar.
There were three major events this week that had a profound impact on U.S. equities, gold, silver and the U.S. dollar.
- Bipartisan deal- This was a major breakthrough event and the signing of it into a law would be bring in a renewed vigour into the economy since the proposal itself has pumped in enthusiasm.
- FOMC Meet– Another key event the week that had an impact was this month’s FOMC statement which provided the information from the Federal Reserve that the subsequent conference by Chairman Powell which ended the conclusion of the last FOMC meeting year.
- Vaccine– The third event that influenced the financial markets this week was the rollout of a Covid-19 vaccine that had just been granted emergency use authorization by the FDA.
After US Fed pretty dovish views we saw a collapse of the US Dollar and a big run up in gold and bit coin on Thursday. Though it hit most mentioned targets and even surpassed it to kiss $1901 an ounce.
The end of the pandemic is in sight, the U.S. dollar is behaving less like a safe-haven asset, and the currency is weakening, adjusting to its own fundamentals, suggesting strong support for gold.
Gold markets initially fell during the week, but then turned around to recover quite nicely to break above the top of the shooting star from the previous week. This suggests that perhaps gold is trying to turn things around and take off again. The $1900 level will offer a certain amount of psychological and structural resistance, but I do think that we break above there and eventually go challenge the $1950 level. That being said, it does not mean that we get there right away, an opinion that Prithviraj Kothari from RSBL had to offer.
So it’s about the $900 billion Covid package from the US. Unless the USD index will now move beyond 90.5, gold will see bounce towards $1905-1915. On Friday the gold market was quite zig zag. Gold has rallied again during the week, breaking above the top of the shooting star from the previous one. It suggests that we still have plenty of momentum.
The bullion king of India suggested that buying gold on dips on levels $1878/1863/1858 and upper side it is expected to reach $1904/1930. So buying in dips would be the investment mantra.