Where Did You Gold? Gold Remains in a Neutral Bias, No Clear Outcome From The Bulls Versus Bears Battle

The price of XAU/USD is currently standing at $1,838.50, with its Relative Strength Index (RSI) at 71, reaching close to an overbought condition, signalling the present appetite of the market. This week has seen gold recording its largest drop since early January.

Analyst Omkar Godbole from FX Street reports of an impending death cross that has formed on the charts. This happens with a crossover of the 50-day Simple Moving Average (SMA) crosses over with the 200-day SMA, and points towards a bearish trend. However, he opines that despite its ominous-sounding name, it is not a reliable indicator. For the bulls to regain dominance, $1,959 would be a key resistance. The present price of spot gold is at $1,847.88. 

Source: Yahoo Finance

In the markets, traders would be watching out for the outcome of the U.S. Federal Reserve (Fed) meeting, where the Fed is expected to maintain its robust support of the U.S economy. Meanwhile, the latest progress on President Biden’s stimulus package sees the U.S. Senate moving towards allowing the Democrats to pass the stimulus package, even without Republican’s support.

The initial euphoria surrounding the Biden stimulus of $1.9 trillion was clearly dwindling as Republicans voiced out opposition over its gigantic size. President Biden’s meeting with the Republican leaders earlier this week also did not bear fruit, leaving many to wonder the fate of the stimulus package. With this recent development, the optimism level has increased, leading to a risk-on sentiment in the market. With this, would traders shy away from gold?

However, one interesting fact is the recent update from The Mint, a division of U.S. Treasury, which reports that there remains a surging demand for gold and silver bullion. In 2020, sales of gold bullion coins leapt by 258%. Is this a hidden clue that there remains yet demand for the traditional safe haven, gold? Only time will provide an answer to that.

Sources: Investing.com, FX Street, Malay Mail, Reuters

XAU/USD (as of Feb 3, 2021, 11.45 a.m., GMT +8) - $1,838.50

FOLLOWME XAU/USD User Sentiment (as of Feb 3, 2021 at 12.25 p.m.)

Short – 49.81%

Long – 50.19%