International gold prices rose slightly on Wednesday as yields on the dollar and US Treasuries fell, reducing the cost of non-dollar purchases, while the prospect of a massive fiscal stimulus in the US made gold more attractive as a hedge against inflation.
Spot gold rose 0.25 per cent to $1859.50 an ounce while the dollar index fell 0.05 per cent to 89.993.
Yields on 10-year Treasuries fell from near 10-month highs, dragging down the dollar. Us President-elect Joe Biden's plan to boost the economy with huge amounts of money has further enhanced the attractiveness of gold.
Jay Jacobs, senior vice president and head of research and strategy at Global X ETFs, said this week that infrastructure has always been a top priority for Biden, who has developed a $2,000bn plan to invest in highways, airports and ports, as well as digital infrastructure and clean energy technologies. The Democratic Party controls both parties in Congress, reducing his resistance to achieving his goals in both areas.
Biden plans to announce the plan on Thursday. The cumulative number of coronavirus infections worldwide has risen to more than 92 million, and some countries have issued stricter travel restrictions to curb the spread of the virus, while vaccination rates are still not high.
"overall, this year is still a very positive year for gold," said Kyle Rodda, an analyst at IG Market. With real yields still negative and the dollar continuing to fall this year, gold remains an attractive option. But as the dollar market tends to balance, it is not surprising that gold is in a short-term downward trend. "
Fed officials believe that if the pace of vaccination is accelerated, the economy is expected to recover strongly. But it also raises questions about the prospects for its loose monetary policy. Gold prices benefit from loose monetary policy.
With the popularity of vaccines, the US economy is likely to recover strongly in the second half of this year, but the development of the epidemic is still affecting the economy and monetary policy will remain loose, Boston Fed Chairman Rosengren said on Tuesday (January 12).
"if the US economy goes well, the Fed will take action," said Michael McCarthy, chief market strategist at CMC Markets. The problem now is that the balance sheet is overinflated. " He added that gold prices would face resistance around $1890 to $1900.
Spot gold is 1891 US dollars in the short term.
On the hour chart, the gold price starts the upward iii trend at 1817 US dollars. The 38.2% target for iii waves is $1891. Iii waves are all sub-waves of the uplink (i) wave, which started at $1764. On the daily chart, gold prices start the upward trend of ((iii)) waves from $1764., (i) waves are the third-tier sub-waves of ((iii)) waves. The 38.2% target for ((iii)) waves is $2002., ((iii)) waves are the sub-waves of the uplink five waves that started at $1451.