International spot gold on Tuesday (January 12) after a short-term rush to retreat again, the highest hit $1,863.73 / ounce gains quickly reduced, once fell to $1,836.85 / ounce, U.S. bond yields continue to weigh on gold. Still, the U.S. political and epidemic situation provided solid safe-haven support for gold. At present, both sides of the fierce confrontation, are waiting to see the situation further development.
The Trump administration will issue new guidelines on Tuesday extending eligibility for the coronavirus vaccine to everyone aged 65 and older, a senior administration official told CNBC. The Trump administration is expected to announce the change at a news conference on Tuesday. The official said states’ focus on vaccinating health care workers and nursing homes has created bottlenecks.
Markets are also keeping an eye on the latest developments in US politics today. President Trump has not been seen in public since he attended a rally last Wednesday encouraging his supporters to march to the Capitol. He is expected to finally make a public appearance later Tuesday, when he travels to Texas to tour the border wall with Mexico, one of the signature projects of his administration. Mr Trump is also expected to make a speech today highlighting his achievements in building a border wall. Especially after a very quiet period since his Twitter account was banned, people are looking forward to hearing the president’s comments on the move by Democrats in the House of Representatives to force him to step down early.
On the other hand, Mr. Biden’s trillion-dollar stimulus plan is also shaping market expectations. Biden, who is expected to unveil details of his stimulus plan on Thursday, agreed, like Trump, that $600 in relief would not be enough and planned to increase it to $2,000. In theory, if that happens, it will continue to weigh on the dollar. That should support gold, but bulls need to worry that the upside may still be limited if fiscal stimulus boosts risk sentiment more than inflationary pressures.
In addition, countries in Europe and the United States are accelerating the distribution and vaccination of vaccines, helping to gradually stabilize the epidemic and thus dampening demand for safe havens. The immediate focus is on the U.S. political situation, particularly the Pelosi impeachment case against President Donald Trump, and if the political situation stabilizes, demand for gold as a hedge against risk will fall again. Overall, therefore, short-term downside risks to gold are accumulating.
Technically, on the daily chart, all eyes will be on gold’s performance around $1,850. A close below that level could push gold towards $1,820 and $1,775. If $1,850 proves to be reliable support, prices could rebound back to $1,900. But the downtrend needs to keep an eye on the lower rail support of the downtrend channel, if it fails to hold, it could reverse the short term gold trend and open up more downside room.
Strategist Margaret Yang said that while gold was under pressure from a rebound in the dollar and higher yields, the market appeared to be ignoring the prospect of higher inflation and new stimulus measures for now, Bloomberg reported. “This means that the sell-off in gold is likely to be temporary, with the downside likely to be cushioned by the new stimulus measures that Mr Biden is about to announce,” she said.
Nicholas Frappell, managing director of ABC Bullion, said the overall macro environment was positive for gold but was likely to be weighed down in the short term by the dollar and higher interest rates.