XAU/USD
The Peoples Bank of China has been tightening their liquidity since October 2020 and the bank drained a net 150 billion yuan ($23 billion) of funds this week using open-market operations (the largest such amount since October.) This roll back of liquidity in China is expected to weigh on commodity prices as the year progresses.
The Volatility S&P 500 Index (VIX) shot up to a two month high earlier this week following the short squeeze in the US equity markets. The price of gold failed to break above the resistance price rate of $1865, this week, despite the increased volatility in the equity markets. Gold usually benefits on the back of heightened volatility due to its safe-haven appeal, which is another negative sign for the yellow metal.
Gold failed to gain any significant upward momentum after it became clear that more fiscal stimulus was going to be unleashed following the US’ “blue wave.” Gold is currently testing the 200-day simple moving average (SMA) price of $1848. A move below $1830 (which has supported the commodity this month) will signal a clear break below the 200-day SMA. The price movement seems to be forming an ABC corrective wave. The completion of wave “C” will allow the price to break out of the “Covid bull channel.”
In summary: A break below $1,830 would project a move towards the target range between $1,665 and $1700, which is at the top of the bull channel from 2016.
The Volatility S&P 500 Index (VIX) shot up to a two month high earlier this week following the short squeeze in the US equity markets. The price of gold failed to break above the resistance price rate of $1865, this week, despite the increased volatility in the equity markets. Gold usually benefits on the back of heightened volatility due to its safe-haven appeal, which is another negative sign for the yellow metal.
Gold failed to gain any significant upward momentum after it became clear that more fiscal stimulus was going to be unleashed following the US’ “blue wave.” Gold is currently testing the 200-day simple moving average (SMA) price of $1848. A move below $1830 (which has supported the commodity this month) will signal a clear break below the 200-day SMA. The price movement seems to be forming an ABC corrective wave. The completion of wave “C” will allow the price to break out of the “Covid bull channel.”
In summary: A break below $1,830 would project a move towards the target range between $1,665 and $1700, which is at the top of the bull channel from 2016.
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