The price of gold is still moving within a bearish channel, which began to form since the start of trading in 2021 amid investor optimism that this will be a year of recovery.
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Gold had a quiet start to trading this week amid a bearish trend, settling around the $1818 level. Gold prices fell despite the decline in the US Dollar Index, due to optimism about vaccines and a planned US stimulus package of $1.9 trillion. The US dollar settled near its lowest level in two weeks with the rise of European and Asian stock markets.
US President Joe Biden will speak at a virtual meeting of the world’s major economies on Friday to discuss the coronavirus pandemic and the distribution of global vaccinations, according to the White House. It will emphasize the need for global coordination on vaccine production, distribution and supply. US lawmakers will likely focus on pushing forward President Joe Biden’s bailout package. Reports indicate that the $1.9 trillion proposal could be watered down.
More than 27 million Americans have already received at least one dose of the coronavirus vaccine, with more than 6 million fully vaccinated. More than 226.5 million still need to be vaccinated to reach the herd immunity threshold. This target of 226.5 million currently requires 453 million doses of the vaccine (this will change if the Johnson and Johnson vaccine is approved for use by the Food and Drug Administration because it requires only one dose). The average vaccination rate in the United States over a seven-day period is just under 1.6 million a day.
Pfizer has said it expects to deliver 200 million doses to the US by July 31 and Moderna aims to deliver 200 million doses by June 30. Johnson & Johnson said it expects to deliver 100 million single doses to the United States in the first half of the year, assuming it gets the regulatory green light. While these numbers indicate that the United States may have enough vaccines to reach herd immunity by the end of June or early July, it is not that simple. There are other variables: the number of vaccination sites, the number of people who can be vaccinated per hour in those sites, the number of working hours of those sites per day, and administrative factors.
Technical analysis of gold:
On the graph of the daily chart, the price of gold is still moving within a bearish channel, which began to form since the start of trading in 2021 amid investor optimism that this will be a year of recovery. The pace of global vaccinations against the virus will determine when the epidemic is brought under control. The future of economic recovery and continued confidence in global financial markets will remain pressure factors on gold, the most prominent safe haven throughout the era of the pandemic. The bears now look to the support levels at $1805, $1792 and $1770, the next targets of the current correction. On the upside, the bulls will regain control over the performance if the price returns to breach the resistance level of $1855.
The price of gold will interact with the extent of investor risk appetite, the performance of the US dollar, and anything new with regard to the upcoming US economic stimulus plans.