Spot gold was little changed in Asian afternoon trading on Monday, trading at around $1,855.
Dhwani Mehta, an analyst at FXStreet, offers a brief analysis of gold’s short-term trend. Here is the following:
Despite ending the week with gains, gold bulls remained unconvinced around $1,850 on fresh concerns over the $1.9 trillion stimulus package passed by the U.S. Congress.
Last week, President of the United States, Joe Biden (Joe Biden) stimulus plan is to avoid the risk of inflation gold provides some signs of recovery, as gold prices rose to $1875, 9 high about Biden’s stimulus plan will seek the uncertainty of bipartisan support, gold has dropped to below $1850, after a week is back near the close.
Rising inflation expectations in the US and a generally weaker dollar on the back of the stimulus package have provided some support for gold.
Heading into the Fed week, gold continued to trade in a familiar range while defending the $1,850 level.
Gold bulls remain hopeful amid growing concerns over the detection of the Novel Coronavirus strain in the UK. Novel coronavirus spreads around the world and is considered highly infectious, more deadly than the original novel.
In addition, doubts about the spread of vaccines, coupled with concerns about the global economic recovery under the influence of the novel coronavirus strain, may also limit the downside of precious metals.
In the meantime, broader market sentiment and dollar price action will continue to play a role ahead of the Dallas Fed manufacturing index and Biden’s speech on US manufacturing. The 46th president of the United States will sign an executive order on “American Manufacturing and American Workers.”
Technically, gold is challenging the 50-dma at $1,859 on the daily chart, while the upward trending 200-dma at $1,849 is likely to provide strong support.
A firm close above the 50-day moving average would allow gold to extend its rally to the 21-day moving average of $1,875. It’s worth noting that the price has been limited below 1875 since January 8.
The 14-day RSI was at 46.94, suggesting the bearish bias remains intact.
As a result, gold could test significant support around $1835- $1832 and break that level, threatening its January 18 low of $1803.
Overall, the daily chart presents a mixed picture, with traders waiting for a strong catalyst with a clear direction.