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Gold prices stabilizing below 21-D SMA, but plenty of risk and demand still out there

  • Spot gold prices are struggling to maintain the bid in an environment where the dollar has firmed and holding the highs.
  • Gold is currently trading at 1280, within the day’s range of between $1,276 and $1,284.  

Strength in the dollar is holding up the bull’s progress in the precious metals as the DXY tests the 96.60 level. At the time of writing, the US government partial shutdown is taking the spotlight as Senators vote to end the deadlock. However, the Senate does not have the votes for Trump’s plan for a $5.7b border wall, which was expected, so, such risk is likely to support gold when coupled with what is happening in Central America and the lack of progress with regards to Brexit and Sino/US trade relations. World growth is also concerning investors and be a weight on US benchmarks on Wall Street.

US jobs data keeping the bid alive in the greenback

Meanwhile, the US dollar picked up a bid as the ECB came across dovish at the same time that US data, in the weekly number of Americans applying for unemployment benefits fell below 200,000 for the first time since 1969. The ECB was citing risks to the growth as being tilted to the downside – mostly because of persisting uncertainties, which may ultimately weigh on confidence. The markets are now expecting that the Council may need to act if the economic weakness persists.  

As for US jobs data, in the week ending January 19, the advance figure for seasonally adjusted initial claims was 199,000, a decrease of 13,000 from the previous week’s revised level,” the U.S. Department of Labor announced on Thursday which is the lowest level for initial claims since November 15, 1969 when it was 197,000

Gold levels

  • Support levels: 1279 1274 1271
  • Resistance levels: 1287 1290 1295

The price is consolidated below the 21-D SMA at 1288 and pivot point at 1282 as the bears run out of steam having reversed the bullish 17th Jan Marubozu Japanese candlestick. The daily MACD remains negative although RSI is neutral and a neutral outlook remains in play at this juncture.  

 

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