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Gold starts the year for health



DATE OF PUBLICATION: 2021-01-06 11:56:19 The celebration on the street of gold continues. It would seem that after Christmas and New Year there should be a hangover, but the precious metal continues to grow as zealously as it did in 2020. Last year, XAUUSD quotes added about 24% thanks to the weak dollar and low real rates on US Treasuries. The latter were under pressure from the growing probability of inflation acceleration. At the beginning of 2021, the external background did not change at all. The agreement of OPEC + to maintain production volumes at the same level under the collective agreement and the intention of Saudi Arabia to cut production by 1 million b / d in February-March unilaterally inflated the quotes of non-oil futures and intensified rumors about rapid growth of inflation. 10-year TIPS yields have dropped to historically low levels, and inflation expectations in the United States for the next 10 years, measured using the break-even rate, jumped to their highest level since 2018. Moreover, the ratings signal that the Democrats will occupy two vacant seats in the Senate. If they manage to take control of both the White House and Congress, Joe Biden will have no problem implementing his idea of ​​increasing the fiscal stimulus. This will strengthen the reflationary environment and will contribute not only to the growth of stocks, but also to gold. Dynamics of TIPS and gold yields Oil on the fire adds the Fed’s intention to sit on the sidelines, at least until 2024. Minutes of the December FOMC meeting, which is scheduled for publication on January 6, will surely show the central bank’s intention to maintain the current parameters of ultra-soft monetary policy until the regulator sees steady progress in the area of ​​inflation and employment. The Federal Reserve is ready to tolerate the growth of the personal consumption expenditure index to 2.5-3%, and this circumstance seriously complicates the life of the US dollar. The worse for the “American”, the better for gold! Thus, in the short term, the fate of the precious metal depends on the elections in Georgia. The Blue Wave could bring its quotes back above $ 2,000 an ounce, and a Republican victory would not be a disaster either. In this situation, the chances of fiscal stimulus will diminish, but the risks of tax hikes and increased regulation will fall, which will support stocks. Rising global risk appetite is a pretext for the US dollar to sell and the XAUUSD rally to continue. Investors will return to the pandemic and trade wars in the medium term. Problems with the production, transportation of vaccines, the reluctance of the population to get vaccinated, as well as the preservation of tensions between the United States and China under Joe Biden, can increase the appetite for reliable assets, contribute to the correction of the USD and precious metal index. The democrat understands that the only way to slow down the Celestial Empire is to create a ring of allies around it. The problem is that Xi Jinping also understands this. Technically, the Wolfe Waves pattern was formed on the daily gold chart with targets at $ 1990 and $ 2060 per ounce. The mood remains bullish, so I recommend that if the Democrats win the elections in Georgia, increase the longs formed on the breakouts of the $ 1890 and $ 1905 levels in precious metals. Gold, daily chart Material provided by InstaForex – www.instaforex.com Source – InstaForex

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