Gold Price Analysis — January 20

Gold (XAU/USD) etched higher in the early European session on Wednesday, reaching a four-day high of around $1857 over the past few hours. The uptick appears to have been triggered by its recent foray into the $1800 support. The US dollar continued on its descent, which tends to favor the dollar-denominated commodity.

Meanwhile, it appears that investors across markets are now treading cautiously ahead of President-elect Joe Biden’s inaugural ceremony later today. This cautious stance has likely extended additional support for gold’s safe-haven status.

The US Treasury Secretary nominee Janet Yellen boosted hopes for additional stimulus measures in the US during her confirmation hearing on Tuesday, as she urged lawmakers to be generous on the COVID-19 relief package.

However, expectations of a more aggressive government spending in 2021 might continue to bolster the US Treasury bond yields and cap any significant rally in the non-yielding commodity. Also, the optimism over the rollout of coronavirus vaccines could further prevent investors from placing aggressive bullish bets on the XAU/USD.

That said, subsequent bullish spikes could be perceived as selling opportunities, warranting some trading caution around gold.

Gold (XAU) Value Forecast — January 20

XAU/USD Major Bias: Bullish

Supply Levels: $1860, $1880, and $1894

Demand Levels: $1850, $1838, and $1830

As stated earlier, gold has facilitated a steady climb from its recent descent to the $1800 area. However, the commodity is experiencing a hard time getting back into the $1860 – $1894 pivot zone, despite several attempts. That said, we expect to see a slight correction in the coming hours near the $1845 area, where dip-buyers will likely come on board and take the price higher.

A sustained break of the $1860 pivot point could open the doors for the commodity to shoot for the $1900 round figure once again.

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