Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
Gold has slumped, now in correction
During Thursday, gold has dropped to the level of 1465.00, unseen for more than a month. On the H4 chart of XAU/USD, we see it is just one step away from the strong support level of 1462.00. The main factor driving the depreciation of the precious metal is better prospects of the global economic outlook. The China-US trade deal is nearing, and the two countries agreed to roll back tariffs mutually. Consequently, gold has suffered due to a potential drop in demand because of clearer global economic perspectives. The bears would use this as an excellent opportunity. However, Thursday evening and today morning show correction in the price. At the same time, the RSI indicator is inching into the oversold level of 30% bottom-up. So watch out – there may be an interesting opportunity for the bulls, with the closest resistance levels of 1484.14, 1491.74 and 1495.87 on their way.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.
The Canadian central bank will make a monetary policy report and announce interest rates on Wednesday, January 20, at 17:00 MT time. Also, the BOC press conference will be held later.
USD’s rally takes a pause, while riskier assets are modestly rising.
We are now past the middle of January, and this means that the largest US companies will report their earnings for the fourth quarter and many of them will provide the results of the entire 2020.