Gold extended Thursday’s recovery move from weekly lows and build on to its strength back above $1200 psychological mark.
Currently trading around $1206 region, off session peak level of $1209, nervousness ahead of Trump’s inaugural speech and uncertainty over the economic impact of his fiscal policies is seen benefiting the precious metal’s safe-haven appeal.
Moreover, Thursday’s less hawkish Fed Chair Janet Yellen drove the US treasury bond yields lower and is undermining demand for the US Dollar, eventually boosting demand for dollar-denominated commodities – like gold.
From technical perspective, the metal held and staged a rebound from its immediate support marked by 23.6% Fibonacci retracement level of its latest leg of recovery move from 10-1/2 month lows ($1123) to nearly two-month high ($1219) touched on Tuesday. The ongoing price-action points to the metal's well-established near-term bullish trend and hence, reinforces prospects of further near-term up-move from current levels.
The expectations, however, would be invalidated if Trump comes out with aggressive fiscal stimulus measures, which might trigger sharp surge in bond yields and attract fresh selling pressure around the non-yielding yellow metal.
Technical levels to watch
A follow through buying interest above $1210 immediate resistance seems to lift the commodity back towards multi-week highs resistance near $1218-19 area above which the near-term recovery trend is likely to get extended towards $1230 resistance area ahead of 100-day SMA hurdle near $1238 region.
On the flip side, renewed weakness below $1200 mark might continue to find support near $1295 level (yesterday’s low), which if broken now seems to trigger a fresh leg of corrective slide back towards 50-day SMA support near $1180 region, with some intermediate support near $1190 level.
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