The price of gold has been weighed down by the strength of the dollar and stock markets, hovering around two-week lows and struggling to resume its rally. The US Congress is working on a budget to stimulate optimism, coupled with the control of outbreaks in major markets around the world, and the strength of the latest vaccine data is encouraging, and the outlook for gold prices is facing an upward trend. But investors should note that the bond signs are optimistic and inflation expectations continue to rise, which will give more guidance to the future.
As of 08:08 Hong Kong time before the press deadline, gold fell 0.02% to US $1833.20.
Fundamental analysis: dollar and stock market strengthen novel coronavirus epidemic vaccine optimistic (gold price is bad)
Given the long-term over-bearish market positioning, the dollar has rebounded stronger and is undergoing a long overdue bear squeeze. Coupled with optimism about risk appetite, further gains in the stock market and crude oil markets are hurting demand for gold. Market optimism is mainly spurred by the ongoing budget adjustment process in Congress. Democratic leaders in both houses of Congress have jointly submitted a budget resolution (budget resolution), to begin the process of trying to pass President Joe Biden novel coronavirus's fiscal stimulus package without Republican support.
The budget resolution submitted by House Speaker Pelosi and Senate Majority Leader Schumer is the first step in the budget mediation process. The newly submitted budget resolution by Democrats will allow Congress to quickly approve novel coronavirus's rescue plan by a simple majority as Republicans oppose President Joe Biden's $1.9 trillion rescue plan for novel coronavirus. The budget mediation process reduces the threshold for the Senate to pass the bill to 51 votes, allowing Democrats to ignore Republican opposition, but as long as a moderate Democratic senator votes against it, the bill may not pass.
Then there is optimism about the novel coronavirus epidemic, where infection rates are falling in major developed markets and mass vaccination programmes continue to make progress. The new data also show encouraging strength in existing vaccines. The latest research results show that Britain's decision to postpone the second injection of the AstraZeneca-Oxford coronal vaccine has been found to be an effective strategy, CNBC reported. "from day 22 to day 90 after vaccination, the efficacy of a single standard dose of vaccine was 76%. Model analysis showed that the protection did not weaken during the first 3 months. " It is worth noting that the World Health Organization (WHO) (WHO) investigation team also successfully ended the quarantine and has carried out a traceability study in Wuhan, China.
Fundamental analysis: bond market bullish signal (gold price is bullish)
Bond market signals are more positive, while real US yields are mixed and 5-year Treasuries have fallen to record lows, while 10-year and 30-year Treasuries remain unchanged. Inflation expectations have risen, with a 30-year balance of payments above 2.15%. Given that gold is seen as a hedge against inflation, this is expected to provide some respite for precious metals such as gold as long as the break-even point continues to rise.
Technical analysis:
According to the daily volatility chart, the main trend of gold prices is declining, and the main trend will be changed through the trading of $1878.90. The main range is $1771.30 to $1966.80, and the gold market is currently trading on the weak side of its pullback zone, trading between $1829.60 and $1843.90, making it bearish.
Continued volatility below the main Fibonacci level of $1846.00 will maintain downward pressure on prices. The daily chart shows that there is no visible support between the midweek low of $1830.10 and the bottom of $1804.70 on Jan. 19. Falling below $1804.70 could lead to further weakness, with a long-term main target price of $1787.30, an increase of 50 per cent.
More than $1846.00 will indicate the existence of a buyer, which could trigger a further rise to $1869.10. While breaking through the strong side may set a bullish tone, any rally is likely to be difficult until buyers can clear the main top of $1878.90, the short-term 50 per cent level of $1885.80 and short-term prices.
