Strategy
Buy Gold at $1920 for a movement to $2075. Stop should be placed below $1882
Technical View
Price broke out of a down trending channel on the first trading day of the year and this could be the start of an uptrend that could bring price to test the Fibonacci 62% correction point of the decline at $1956. A move beyond this point could be the start of a rally to test the previous high of $2075. Earlier, the price decline was halted at the Fibonacci 50% of the rally, which is a hint that the decline was a correction of the previous rally from $1440 to $2075.
20EMA has turned bullish and is moving higher. MACD has also turned bullish and is moving higher as well. Stochastic is moving higher but has not reached the overbought zone. Momentum indicators are hinting of a price rally.
Fundamental View
Monetary policy in the United States is likely to keep the US dollar weak. The US Federal Reserve has hinted of keeping US interest rates low for the next 2 years till 2022 to help the US economy fights against the current slowdown due to the coronavirus pandemic. This is likely to take away the big advantage that had kept the US dollar strong in the past few years. Beside ultra-loose monetary policy, the Federal Reserve is likely to embark on a prolong program of bond buying to keep interest rates and yields low. This is likely to keep the US dollar weak.
Fiscal policy is also likely to keep the US dollar weak. A US stimulus relief package has been passed by Congress which gives US citizen a US$600 cheque. This package is to help its citizens cope with the coronavirus pandemic. However, there are calls for a US$2000 cheque. This massive amount of money, in addition to an earlier US$5 trillion, is likely to weaken the US dollar. While fiscal policy is likely to weigh on the US dollar, monetary policy is also going to add to the weigh hanging over the US dollar.
Coronavirus pandemic is also likely to weigh on the US dollar. While a COVID-19 vaccine is at hand, supply of this vaccine in the near term is unlikely to meet demand for it. In the US, coronavirus cases are still on the rise, which had led to many states imposing restrictions. This could have an adverse effect on the US economy. The US dollar will weaken if the US economy weakens.