Gold got its positive traction again. That happened at the last day of sales for this week and reverse the decline that was shown a day before. It goes to the level around $1.800 at the moment.
Last time, that commodity was moving around the area of $1.790 which means it increased by 0.40%. The emerged of some new sales actions to the US dollar was seen as one of the supportive factors.
It is especially to support the commodity in the USD denomination. Aside from that, a concern about the increasing COVID-19 cases in several countries becomes a profitable factor for gold so far.
The Decline of US Obligation Yield
The decline of the US obligation yield also supports the gold. The 10Y treasury return slipped because the market participants responded to news about Joe Biden as the President of the United States.
The news stated that Biden will double the tax for capital gain. That will become 39.6% for those who have the salary for more than q million dollar per year. It is too hard for some people.
From the technical side, If it is able to pass the level of $1.800, gold directs to the resistance of $1.815 – 16. That is the Fibonacci 50% level from the decline of $1.959 - $1.676 in the market.
The price of gold is having a good trend. It raises to the highest level for eight weeks because of the increasing virus cases in some parts of the world. This situation reduced the growth prospect.
Furthermore, it also increases the demands for security. The market is now still in a restless condition. It is especially about the reflation sales release. That creates a different action that will be taken.
Reflation Release and Its Impact
The reflation released pushes the investors to rate again about the recovery prospect and change its portfolio. That may go to a more balance management. There is another thing to know.
A treasury related to safe haven is bargained during the early sales session of APAC. That send the lowest level of 10Y interest rate for six weeks. It is in the level of 1.538% and become a real return.
The decline of that real return increases the appeal of precious metal. It is definitely because the cost of chance to hold it is decreasing as well. It seems that many parties will be more carefully.
The example is the seller. They will pay attention to the interest rate decision that will make by ECB in the future. That is related to the guides about the Central bank monetary policies.
What The Participants Hope
The market participants are hoping that ECB can widely maintain its polices. That should not be change. Vice versa, the policy must be maintained, and it is unchanged to have the accommodated attitudes.
It is especially amidst the pandemic situation like this. EuroZone has a slower vaccination speed that other countries such as England and the United States of America. It is a sign of something.
It shows that the EuroZone may experience the bigger economic difficulties in some months ahead. With this background, the ECB chance to dovish is still higher. It comes with the risk too.
What is that risk?
So many experts warned that the situation like that may come with a risk. The most possible one is when the central bank decided to withdrawing the pandemic emergency purchase program.
It is also called with the PEPP program after a down payment done in March. The ECB president, Christine Lagarde will hold a press conference after the meeting. She may give her speech too.
That speech will be scrutinized by several market participants and parties in the market. Those are like the currency and for sure the gold sellers.
