Recent Run
Gold prices remained relatively high at the Asian session maintaining $1,800 in trade value. The metal had a slow start at the beginning of the week as it marked a Doji candlestick on Monday trade after downtime in the previous week. The upward trend indicates candlestick joins mixed feelings about the Federal Government’s next decision and the COVID-19 Omicron variant to be reasons for the latest increase.
Meanwhile, the American ten-year and five-year Treasury yields increased to the highest point after 2 years as the 2-year coupon increased to the levels of February 2020 during the week. On the other hand, S&P 500 Futures increased by 0.12% intraday.
The American Treasury gains seemed to have reacted to the new comments of the President of the Federal Reserve Bank of San Francisco, Mary Daly, and that of John Williams, New York’s Fed President, on Friday in the leadoff to next week’s Federal Open Market Committee meeting. With that, the bond coupons responded a little to the US Retail Sales for December and the Consumer Sentiment Index for Michigan in January.
Observers should be mindful that concerns over Omicron sent different signals as cases rise in Japan and China, indicating more virus-motivated actions and restrictions while lower numbers in the West calm investors. Tokyo and ten other prefectures in Japan stand the risk of seeing some emergency, while Chinese Tianjin is threatening to stop every foreign correspondence as a result of COVID-19.
North Korea’s missile crisis and the China-American power tussle also pose a threat to the market sentiments. Forging ahead, the British jobs report and the Bank of Japan’s monetary policy will bring up their updates about their concerns over Omicron and feeders speculating China will possibly reduce rates.
Technicalities
Monday’s upward movement sent indications to keep gold investors hopeful during the Asian sessions.
Nevertheless, an upward break of the 61.9% Fibonacci retracement of Nov-Dec 2021 downside, about $1,840, became necessary before gold buyers could take control. Whereas the top marks during July and September, about $1,834, act as a confirmation point for gold’s rally.
As a result, the run-up may target the many low points marked in the middle of November around $1,850. As an alternative, reverse moves may target 50% and 38.2% Fibonacci retracement levels, both almost at $1,815 and $1,800 thresholds, respectively.
Although about $1,793 is a strong support point for gold sellers to look for, overall, gold buyers will brace up for the short-term hurdle upwards.