On Wednesday morning, gold maintains an upward trend thanks to a weakening dollar and comments from Janet Yellen, who addressed Congress to increase spending on bailout amid the COVID-19 pandemic.
Janet Yellen spoke in the Senate, where hearings were held to confirm her as US Treasury Secretary. The former head of the Fed said that the economy needs urgent large-scale stimulus measures. She noted that the economic benefits of increasing stimulus measures will significantly outweigh the risks associated with increasing debt obligations. Despite the growing debt burden, the debt to GDP ratio remains stable. Yellen also said that the tax cuts for large corporations introduced by Trump in 2017 should be canceled.
Yellen's comments put pressure on the US dollar and the Treasury bond yield curve. Expectations associated with rising spending in the US make gold more attractive as a hedge against inflation.
Today news from the US will remain the focus of the financial market. At 17:00 GMT, Joe Biden is to officially take office as President of the United States. Investors will closely follow the speeches of the president and other officials.
In general, the market maintains a positive fundamental background. Only technical factors can exert pressure on gold. The price is approaching the important resistance level of 1862.00, which may turn the price down again. It is possible to count on the continuation of the bullish trend only after the breakdown of the resistance at 1862.00.
The main scenario is growth to 1862.00.
An alternative scenario is a decline from current levels to 1824.00.
The current fundamental outlook is positive. We still prioritize longs with entry points on a pullback to the 1835.00 area.
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