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Gold is under pressure again


On Friday, the price of gold declines amid rising yields in US Treasuries and stable trading in the US dollar.

 

The yield on 10-year US Treasury bonds has been consistently held above 1.0% for 2 weeks. After a slight pullback, the yield curve resumed its upward movement amid increased inflationary expectations. The Democrats who came to power in the United States promise to significantly increase spending on supporting and stimulating the economy in a pandemic. The White House has prepared a $ 1.9 trillion additional spending program. Earlier, the candidate for the post of US Treasury Secretary Janet Yellen announced the need to increase spending in order to avoid a long and very severe economic recession.

 

Further build-up of fiscal stimulus in the US is a positive signal for gold in the long term, but short-term growth opportunities are limited by rising Treasury yields.

 

The US dollar is exerting a downward pressure on gold today. Since the beginning of the day, the dollar index has risen in price by 0.05% and remains inclined to further strengthen against other major currencies.

 

In the economic calendar today it is worth paying attention to the publication of interim data on PMI of the manufacturing sector and services in Europe and the USA. Also in the US will be released December data on sales in the secondary housing market.

 

Bearish signals prevail locally on the chart. Buyers were unable to keep the price above 1862.00. Within the day, we expect a decline in quotations towards the level of 1824.00.

 

  • Resistance levels: 1890.00, 1915.00, 1935.00.

 

  • Support levels: 1862.00, 1824.00, 1810.00.

 

The main scenario is consolidation below 1862.00 and falling to 1824.00.

 

An alternative scenario is growth from current levels to 1890.00.

 

The current fundamental outlook is moderately negative. The market situation has changed. Fundamental factors and technical signals indicate a decline in quotations. Within the day, we consider shorts on a pullback to the level of 1870.00.

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