Gold Technical Analysis: Looking For Buying Opportunities

It appears that precious metals are in an appropriate corrective stage within the bullish market.

By the end of last week’s trading, the price of gold had plummeted to the support level at $1824 after several failed attempts by the bulls to break through the top of the resistance at $1864. The strength of the US dollar had the greatest impact on the decline of gold. Gold's gains prior to that were supported by US President-elect Joe Biden's announcement of a $1.9 trillion stimulus package proposal and the cautious outlook for the US Federal Reserve Bank for next year. Risk sentiment has been weakened by concerns about soaring cases of coronavirus in Europe and China, tightening lockdown restrictions in several cities around the world and heightened tensions between the United States and China.

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Amid a rapid outbreak of the coronavirus, several countries around the world tightened lockdown measures. France has strengthened border control and extended curfews across the country to combat the virus. China has also placed millions of people on lockdown in response to a new outbreak of COVID-19 in the north and northeast.

Data from the US Commerce Department said that US retail sales fell -0.7% in December after falling a revised 1.4% in November. Economists had expected retail sales to come in unchanged compared to the original 1.1% decline in the previous month. Also, the US Labor Department said that the Producer Price Index for final demand rose 0.3% in December after a slight increase of 0.1% in November. Economists had expected production prices to rise by 0.4%.

The Federal Reserve Bank of New York revealed in a report that activity in the New York manufacturing sector unexpectedly grew at a slower pace in January. The Federal Reserve Bank of New York said its General Business Conditions Index fell to 3.5 in January from 4.9 in December, although a positive reading still indicated growth in regional manufacturing activity. Economists expected the index to reach a reading of 6.0.

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