The yellow metal is currently under immense pressure on the basis it lost about $50 in value in the last two trading sessions.
What you should know: At the time of drafting this report, Spot gold dropped by 0.3% to $1,839.37 an ounce after ending 0.4% lower on Wednesday.
The precious metal has lost more than 3% this month, its worst January performance since 2011, as global investors weighed on the strong U.S dollar, prospects for more stimulus programs, and most importantly the surging viral attacks by COVID-19.
- The U.S Fed Reserve Chairman, Jerome Powell hinted that the availability of vaccines was grounds for optimism, further saying such could mean a significant improvement for the world’s biggest economy later this year.”
- Gold prices have also been under pressure, taking into account the U.S Federal Reserve left its benchmark interest rate unchanged as expected and stuck with the current pace of bond-buying, thereby supporting the dollar and putting bullion on course for the worst start to a year in 10 years.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on market conditions weighing on gold prices
“With the FOMC only holding the interest course, it wasn’t enough to boost gold, especially in the face of a more robust “safe-haven demand for the US dollar. Compounding matters gold is getting sold again, lightly mind you to cover margin calls weighing on sentiment.”
Bottom line: That said the precious metal is in a tight corner, as gold traders remain stuck in a tight range around.
Still, the trend is looking less and less constructive, as the yellow metal struggles to recover from the selloff that took place at the start of the year, and with the historically bullish January seasonality already taken out of the equation.