Starting at 15:20 EST, the basis of gold futures contracts, the most active Comex contract in February 2021, is set at USD 1883.40, after taking into account the gains of USD 3.00 (0.16%). While on the surface this could be interpreted as traders bidding the larger precious metal, in today’s stock, it was 100% due to a weak US dollar. The US dollar traded today under pressure has fallen by 4/10 percent and, after taking into account today’s decline of 37 points, is currently set at 89,905. Simple math tells us that the 0.40% drop in the dollar is just over double the 0.16% gain in gold futures today.
The same result in spot gold can be seen in the KGX (Kitco Gold Index) view, which shows that starting at 3:41 PM spot gold was set at $ 1878.40, which is a net gain of $ 5.50 or + 0.29%. On closer inspection, we can see that traders contributed to a fractional selling pressure of about $ 1.20 per ounce. The weakness in dollars was the one that contributed 6.70 USD and led to a net gain of 5.50 USD today.
Many of today’s net changes in financial markets have been linked to confusion, as Senator Mitch McConnell’s majority leader blocked Senator Chuck Schumer’s effort to increase direct payments from the new round of tax incentives from $ 600 to $ 2,000. Yesterday, the House passed a bill to address the value of the stimulus that will be allocated through direct payments as part of the fiscal stimulus package signed on Sunday by President Trump.
On a technical basis, the support for setting the price of gold in the last three days has been defined by intraday lows that have come very close to the 50-day moving average, which is currently set at $ 1870.90. Below the 50-day moving average, the next level of support is at $ 1860 and is based on a series of lows that occurred on December 22nd and 23rd.
Resistance in the last five trading days was defined by the 100-day moving average of gold, which is currently set at 1904.50 USD. In the last seven trading days, gold has traded intraday at the 100-day moving average twice. But both attempts failed to sustain a price above the 100-day moving average, let alone close above that price point.
Another major factor that has put pressure on gold prices recently has been a strong sense of risk in the market, in which market participants have favored US stocks for potential returns instead of a flight to the safe attraction of gold. Then there is the issue of the historic rise of Bitcoin to record prices of all time, capturing some of the capital that would have been poured into gold. Bitcoin futures (BTC F21) trading on the Chicago Mercantile Exchange today earned $ 280 and are currently fixed at $ 27,370 per currency. This is the highest futures price ever recorded for a single currency. Over the weekend, the price of Bitcoin gained over $ 3,000, causing a lag from the close on Friday and Monday morning.
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