Gold Price Analysis: XAU/USD bulls take a breather after biggest daily gain since Jan. 4

Gold trades near $1,870 in Asia, having jumped 1.7% on Wednesday.
Expectations for bigger US fiscal stimulus push inflation expectations higher.

Omkar Godbole FXStreet Contributor

Gold is consolidating on Wednesday's gains, with investors expecting that the new US President Joe Biden would boost stimulus to counter the coronavirus-induced economic slowdown.

The yellow metal is trading in a sideways manner below $1,870 per ounce at press time, having rallied by 1.7% on Wednesday. That was the biggest single-day percentage gain since Jan.4.

Having unveiled a $1.9 trillion stimulus plan last week, Biden's circle of advisors is now focused on delivering a follow-up package focused on two interrelated issues: climate and infrastructure.

Inflation expectations have already risen to multi-year highs above the Federal Reserve's 2% target, strengthening the case for investing in gold and could rise further with investors expecting bigger stimulus.

From a technical analysis perspective, Wednesday's gain has confirmed a reversal higher signaled by the long tail attached to the Jan. 18 candle. As such, the metal could test the 100-day Simple Moving Average (SMA), currently at $1,884.

Further gains, however, could remain elusive if the US Treasury yields track inflation expectations higher, putting a bid under the US dollar, gold's biggest nemesis. The 10-year Treasury yield is currently sidelined near 1.07%.

Technical levels

XAU/USD

Overview
Today last price	1868.78
Today Daily Change	-1.11
Today Daily Change %	-0.06
Today daily open	1869.89

Trends
Daily SMA20	1877.37
Daily SMA50	1860.13
Daily SMA100	1884.15
Daily SMA200	1846.09

Levels
Previous Daily High	1871.02
Previous Daily Low	1832.48
Previous Weekly High	1863.83
Previous Weekly Low	1816.96
Previous Monthly High	1906.87
Previous Monthly Low	1775.52
Daily Fibonacci 38.2%	1856.3
Daily Fibonacci 61.8%	1847.2
Daily Pivot Point S1	1844.57
Daily Pivot Point S2	1819.26
Daily Pivot Point S3	1806.03
Daily Pivot Point R1	1883.11
Daily Pivot Point R2	1896.34
Daily Pivot Point R3	1921.65

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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