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Lunar New Year at ABC Bullion

12 February 2021

Spot gold was steady at $1,823.20 or AUD2353.55 per ounce by 4pm AEST. Prices were up 0.7% so far in the week. U.S. gold futures slipped 0.1% to $1,825.40.
 
The beginning of the Lunar New Year period meant Asian trade was a relatively muted affair as a number of Asian centres leave for the beginning of the celebration.    
The dollar headed for its first losing week in three as new signs of weakness in the U.S. jobs market dented investor expectations about the pace of a pandemic recovery. A slower-than-anticipated vaccine rollout and the rise of coronavirus variants may make attaining herd immunity against COVID-19 difficult, but that should not stop the economy from rebounding, according to a U.S. central banker. A drop in new COVID-19 cases has raised cautious optimism that momentum could pick up by the spring.
President Joe Biden plans to invest heavily in infrastructure, subject to congressional approval. The $1.9 trillion COVID-19 aid package will be winding its way through Congress in the next few days without significant Republican support.
Biden and his Chinese counterpart Xi Jinping held their first phone call on Thursday and though Xi warned confrontation would be a "disaster" for both nations, though the leaders appeared at odds on most issues.

On the technical front Gold recovered from the technically oversold levels seen last week to make a weekly high so far of US$1855, helped by a soft-looking DXY (Dollar Index). The price then tipped lower as US 10-year yields rose 0 1.16 %, near the weekly high of 1.20 %. The continuation of a ‘risk on’ attitude to assets continues to keep gold on the defensive, and technically, the short-term outlook is dominated by gold remaining below key resistance levels at US$1865-1875.
Longer term technical support from the Weekly Cloud is helping gold but now that the price has broken down through US$1837, the price is beginning to range in a volatile fashion. Key support remains at US$1760-1763.
The S & P 500 has had a buoyant week as part of the prevailing ‘risk on’ sentiment however it is worth noting that both Tuesday and Friday displayed ‘interesting’ candles where the opening and closing price of the session were almost identical. This can indicate an element of ‘indecision’ in the collective psychology of the market and it will be interesting to see where the index closes this week to give a sense of where risk appetite is shaping up for next week.
Short term, weakness at US$1807-1812 should find support.
In physical metal news, The United States Mint was unable to meet surging demand for its gold and silver bullion coins in 2020 and through January, due partly to pandemic-driven demand and plant capacity issues, it said. Sales of US gold bullion coins rose 258% last year while silver coin demand was up 28%, the Mint said on Tuesday. Heavy buying has continued in 2021, it said, squeezing supplies, which had already been tight as the coronavirus affected production.

This week’s main attraction in the financial world was that Tesla had bought $US1.5B in Bitcoin, causing the price to spike to USD 47, 000 per Bitcoin. In the same announcement Tesla announced that it would be taking Bitcoin as a payment in the "near future". Unlike ABC Bullion which has been accepting Bitcoin and 20+ other crypto currencies as payment for several years now. At ABC Bullion we are recruiting a new client base young investors who are crypto and precious metal enthusiast. 

Happy Lunar New Year from ABC Bullion