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Growth in US Treasury Yields Limits Opportunities for Gold Recovery

Gold at the beginning of trading on Monday fell slightly, but at the beginning of the European session won back the lost positions. At the beginning of the new trading week, investors continue to use the data on the labor market published on Friday. Published statistics cast doubt on the possibility of a rapid recovery of the US economy after the COVID-19 pandemic.

 

Also, investors continue to follow the debate on the new program to help the economy. Treasury Secretary Janet Yellen said Sunday that the US could return to full employment in 2022 if the country adopts a strong enough stimulus package. The Democrats are expected to kick off the process of passing the bill proposed by Joe Biden in January this week.

 

The dynamics of physical demand for precious metal has a positive impact on gold. In China, which remains the world's largest gold buyer, demand is growing ahead of the upcoming Lunar New Year holidays. Physical demand was also boosted by falling domestic gold prices in India.

 

The restraining influence on gold today is still exerted by the dynamics of the dollar index and the yield curve of the American Treasuries. Today, the yield on 10-year Treasury government bonds has risen to 1.188%.

 

A correctional wave is developing on the chart. The closest target is the level of 1824.00. In the area of ​​this mark, one can look for signals for a price reversal downward, since the downward movement remains a priority in the medium term.

 

  • Resistance levels: 1824.00, 1840.50, 1866.50.

 

  • Support levels: 1794.00, 1780.00, 1760.00.

 

The main scenario is growth to 1824.00 and a downward reversal.

 

An alternative scenario is a breakdown of resistance at 1824.00 and growth to 1840.50.

 

The current fundamental outlook is neutral. Sales remain a priority. We are looking for entry points at the levels of 1824.00 and 1840.50.

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