Gold goes down 1,835! Biden's inauguration became a key guide to Yellen's continued ferment of doves
2021-01-19


FX168 (Hong Kong) - After a chaotic and risky week, gold prices began the week with a calm before the storm, falling below $1,850 and continuing to fluctuate between $1,827.30 and $1,840.70. Gold buyers benefited from a weaker dollar and a holiday in the US market, with risk rebalancing. Democratic presidential candidate Joe biden's inauguration on January 20, will be the key to their risk of pilot guidance, as for the policy direction after taking office, biden currently nominated candidates for finance minister yellen dovish comments, also make investors have patience waiting to see the new fiscal stimulus measures and future economic trends, investors are fully prepared for critical period.
 
Gold fell 0.01 percent to $1, 837.30 as of 8:06 a.m. in Hong Kong. The yield on the 10-year US Treasury note rose 0.32 per cent to 1.101.
 
Fundamental analysis: Investors are positioning themselves for key periods of risk
 
The extended holiday weekend in the US cooled the greenback's gains as it rose to its highest level since December 21. Looking at the gold market, it can be attributed to caution ahead of the inauguration of the Biden administration and continued concerns about the Covid-19 outbreak. The market's bias towards optimism was driven by the Chinese data and Biden's promise of a new two-step fiscal stimulus package, which would amelior the uncertainty caused by U.S. President Donald Trump's trade war with China. But it is worth noting that the trade war between China and the US is not abating, and Trump just recently told Huawei's US suppliers to stop supplying them.
 
Biden's new fiscal stimulus will need to be approved by the U.S. Senate, and that's where Yellen will play a role on his team of nominees. The Wall Street Journal said she was expected to confirm the US commitment to market-set exchange rates. She said she would not seek a weak dollar after taking office, stressing that the US would not choose a weak currency to give itself a competitive advantage and should oppose attempts by other countries to do so. While President Donald Trump has for years argued against a strong dollar, saying it would give other countries a competitive advantage, the policy outlined by Ms. Yellen signaled a return to traditional posture. Against this backdrop, investors also heavily shorted the dollar, with bets against the greenback at the highest level in a decade, in part because of forecasts that trade and budget deficits will widen further under a new administration.
 
"Yellen is sort Of signalling a laissez-faire approach, a return to pre-Trump tradition, and I think the dollar is likely to continue to fall," explains Sin Moheung, an analyst at the Bank Of Singapore. In terms of the fiscal rhetoric, the dollar and the financial markets will no longer be the Treasury secretary's focus and the main focus will be on the implementation of the financial assistance, "he said.
 
In the absence of a main risk index, under the leadership of the new champions league outbreak out again to return to the investors, the current trend shows that in Europe, America and Britain's new champions confirmed cases in late has the ability to obtain relief, because of the new champions league vaccine gradually spread to curb high contagious strain, also has been working intensively to raise global vaccination programs. But the global epidemic cannot be contained anytime soon, which in turn has prompted new restrictions on activity. Countries in Asia and the Pacific are preparing vaccination programs after confirmed cases of a variant of the virus, with countries like Japan and Malaysia implementing restrictions to prevent the outbreak from getting worse before a vaccine arrives.
 
Against this backdrop, the S&P 500 is showing modest gains, while the dollar index is showing modest losses. Looking ahead, secondary economic and epidemic updates in Asia may provide more guidance for gold traders ahead of key speeches from Yellen and Biden, as well as a reminder that investors need to watch the ECB monetary policy meeting.
 
Technical analysis:
 
Unless gold breaks its 200-day moving average and its uptrend since March around $1,845 and $1,823, respectively, it is likely to continue to consolidate.