Gold Technical Analysis: General Trend Still Bearish

Mahmoud Abdallah

Investors abandoning the dollar was an opportunity for the price of gold to move higher, but its gains did not exceed the resistance level of $1745, where it is stable as of this writing. Demand for safe-haven assets increased amid a weak dollar and falling bond yields. The US dollar hit its lowest level in nearly two weeks as growing optimism about economic growth weakened demand for the currency. Yesterday, gold futures ended up $14.20, the highest settlement in more than five weeks.

In the same performance, silver futures contracts ended higher at $25.227 an ounce, while copper futures settled at $4.1165 a pound.

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Gold may remain stable on the current situation as investors await the minutes of the recent monetary policy meeting of the US Federal Reserve. Investors are looking for insight into what policymakers will require to start tightening sooner than expected.

Before that, the International Monetary Fund raised its forecast for global economic growth for this year and next, citing huge financial incentives in some major economies and a vaccine-driven recovery in the future. According to his vision, the global economy is expected to grow by 6% this year and 4.4% next year, according to the World Bank in its latest report on the global economic outlook, which was released yesterday.

In the January update to the World Economic Outlook, the International Monetary Fund forecast growth of 5.5% and 4.2%. The latest forecast is also stronger than those in the October WEO.

A senior European Medicines Agency official said that there is a causal relationship between AstraZeneca's coronavirus vaccine and rare blood clots, but it is unclear what the link is and that the benefits of taking the dose still outweigh the risks of contracting COVID-19. Accordingly, Marco Cavalieri, head of health threats and vaccine strategy at the Amsterdam-based agency, told Il Messaggero in Rome on Tuesday that the European Union Medicines Regulatory Authority is preparing to issue a more specific statement on the topic this week.

Based on the evidence to date, Cavalieri said there is a clear association between the AstraZeneca vaccine and the dozens of rare blood clots reported worldwide among the tens of millions of doses of AstraZeneca administered.

Any other doubts about the AstraZeneca vaccine will be a setback for the vaccine globally, which is critical to the vaccination campaign in Europe and a fundamental pillar of the global strategy to deliver vaccines to poor countries. AstraZeneca is cheaper and easier to use than competing vaccines from Pfizer and Moderna and has been approved for use in more than 50 countries, including 27 countries in the European Union and the World Health Organization. The US authorities are still evaluating the vaccine.

Technical analysis of gold:

On the daily chart, the formation of a new ascending channel for the price of gold began, but the bulls' control of the trend still needs to breach the psychological resistance level of $1800 an ounce. This will depend on the performance of the US dollar in the coming days, as well as investor sentiment towards new global restrictions to contain new severe waves of infections with the coronavirus. Bear in mind that gold is one of the most important safe haven assets in times of uncertainty.

Therefore, I still prefer to buy gold from every downside level. The closest buying targets are now $1715, $1695 and $1675.

Gold

Mahmoud Abdallah
Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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