Daily Market Recap - Gold on the move

The price of gold fell over 1.2 percent on Tuesday on the back of a strengthening dollar and rising US Treasury yields.

The yellow metal tends to underperform when the dollar is rising simply from the way that it is priced. Because most gold is quoted in dollars, a strong dollar means that gold has to fall to adjust to the higher overall value.

Strangely enough, gold didnt follow the price of silver, which jumped 10% on Monday, but has been impacted after silver reversed course today and has been weighing on the price of gold as both metals tend to be driven by similar factors.

Traders need to watch out for the U.S. dollar in the coming sessions as the U.S. dollar index (DXY) has reversed course and is showing signs of life again, setting up the scene for a play against the value of gold. That being said, gold boasts a lot of support towards the 1,800 marks. Should prices move below the 1,800 however, gold may slide rapidly towards the 1,780 level.

On the upside, the 20-day EMA would constitute the immediate resistance level. If gold prices manage to close above it, it opens up the possibility that gold could move towards the 1,900 level, or more likely the 1,880 level.

(Chart Source: Tradingview 02.02.2021)

In the meantime, gold should continue to trade in a consolidation pattern with a slight bearish bias as the covid-19 vaccine rollout figures slowly begin to rise. As a side note, it would be worthwhile to keep an eye on the wallstreetbets reddit forum for any plans they might have for gold.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.