Gold Price Analysis — January 4

Near-zero interest rates and a bolstered economic outlook amid improving COVID-19 vaccine rollout has caused the US dollar (DXY) to slide even further, boosting demand for gold (XAU/USD).

China’s Renminbi grew by about 1% in the early Asain session on Monday, as the USD/CNY falls below a 30-month low for the first time. The Chinese Renminbi gained against the dollar despite dwindling manufacturing activities. The Caixin/Markit Manufacturing PMI report for December fell below speculators’ expectations. Nonetheless, economic activities in the second-largest economy are in full swing as other developed economies continue to combat the spread of the virus with renewed lockdown restrictions.

In other news, Georgia’s Senate runoff elections, scheduled to hold on Tuesday, will be crucial for the dollar, considering that a Democrat win of both senate seats could trigger additional stimulus for US citizens. That said, easing programs by the US government always has negative impacts on the greenback.

Meanwhile, gold has begun the new year on a very bullish note. At press time, the precious metal is trading up at +1.8%, with a daily—and YTD—high of $1936. Several factors will likely keep providing adequate support for the yellow metal in the coming weeks and months. Further lockdown restrictions across the globe as Covid cases continue to rise and additional easing measures by central banks are some of the bolstering factors for gold in the near-term.

That said, many speculators are now placing their expectations on a break of the highly-coveted $2000 price tag in the coming months.

Gold (XAU) Value Forecast — January 4

XAU/USD Major Bias: Bullish

Supply Levels: $1940, $1950, and $1965

Demand Levels: $1920, $1907, and $1900

The XAU/USD is currently trading in a bullish momentum up our hourly channel, following a clean bounce off the $1885 level as previously predicted. We expect the commodity to continue upwards towards the $1950, at least, as $2000 is expected to come into play soon.

However, the precious metal has ventured into overbought conditions, making a modest pullback to the lower-$1900 in the near-term likely.

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