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Gold seems to have run out of safe haven steam

Bears have a quick response to Tuesday's monthly highs with renewed key support testing.

Gold is intensely testing the $1800 psychological value on Wednesday after previous rally to a $1835 monthly high. Demand for the precious metal is being held back by a moderate willingness to take risks based on news from China, regarding it’s Covid policies.

Bullion prices have been stuck above $1,825 for the last two weeks. This is after a 12% rise from their lows near $1,600 in mid-November. The news that China is getting rid of quarantine for travellers coming into the country has made the market a little bit happier.

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China quickly announced a number of steps to open national and international borders in an effort to calm fears about the Covid situation. In doing so, the dragon nation first said that travellers coming into the country wouldn’t have to go through quarantine.

Also citizens could apply for tourist passports and travel abroad again starting on January 8th, 2023. Still, a US official told Reuters that the US government might add new Covid rules for Chinese travellers to the US because of worries about the “lack of transparent data” from Beijing.

The dollar is supercharging the price movement on precious metals

Even though the US Dollar index is still in the red, trading 0.2% lower, the happier market moves slowly towards it. The dollar index had a moderately positive start, which pushed the DXY to session highs at 104.35.

We can see this affecting gold’s little brother – silver as well. Silver price trades at a new intraday low near $23.875 as bears come back to the table early Wednesday after being absent for two days. 

Gold brief technical analysis

Currently testing the crucial support at $1800, a level last seen in August, the bears have the upper hand (so far). Today’s session could, if bears keep up the pressure, very well go towards a new support forming at the 200 day average $1780. Bulls could see a nice opportunity to take the price back to the monthly highs at $1835. 

gold price

Gold 1D chart, source: tradingview.com, author’s analysis 

Tomáš is a financial reporter with US markets as his main field. Tomáš is an aspiring author and entrepreneur aspiring to help people get better in financial knowledge.

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