Gold price is down 6.7% in the past two weeks. Here’s what we can expect in February

Gold prices are closed the week 1.1% lower after plunging nearly 2.6% the week earlier. A new stimulus plan unveiled by President-elect Joe Biden may provide a boost to gold investors.  

Fundamental analysis: All eyes on stimulus

President-elect unveiled his much-anticipated $1.9 trillion stimulus plan two days ago. The plan includes higher-than-expected stimulus checks, and bigger support for the unemployed, small businesses, states, and local governments. 

The new stimulus plan is expected to yield a downward pressure on the U.S. dollar but also support for gold prices. 

However, analysts are looking surprised by the short-term resilience of the U.S. dollar. 

Technical analysis: Failed breakout?

Gold prices are now trading about 6.7% lower compared to the 2021 highs printed on January 04. This week’s low of $1,817 per ounce is the lowest the prices of the yellow metal traded since late November. 

The failure to close higher last week resulted in a failed breakout. This is likely to yield a bearish pressure on gold prices in the short-term with the crucial support located at $1,770 per ounce. 

Summary

Gold prices are down nearly 7% resulting in a failure to close the week higher despite positive fundamental developments. The risk is tilted to the downside in the short-term.