Why Gold has been going nowhere?

Gold has been restricted largely to a range of $1230-1243 levels over the last one week. Occasional dip below $1230 has proved to be short lived.

The sideways churn continues this Thursday morning, with metal trading around $1235/Oz levels.

Downside capped by no tax action, fiscal plan

Over the past two months, the markets have been largely driven by the hopes and promises of the big three - tax cuts, infrastructure spending and deregulation - during Trump Presidency. However, markets’ patience is being tested by the lack of details of the fiscal plan.

Moreover, there is fear that Trump may not be able to meet/surpass market expectation and that could trigger unwinding of the Trump trade. Consequently, the downside in gold is being restricted around $1230 levels. The restrained action in the treasury yields is also helping the yellow metal.

Record rally in stocks, strong USD capping upside

US stocks are on a tear. Dow Jones closed at record highs for the ninth straight day on Wednesday. The risk-on rally is capping the haven demand for the metal. Furthermore, the recovery in the Dollar Index from 99.19 (Feb 2 low) to 101.70 levels is also keeping a tab on the gains in gold prices.

The range may remain intact today as the US economic calendar is light.

Gold Technical Levels

A break above $12441.71 (Feb 8 high) would open doors for $1261 (100-DMA) levels. On the downside, breach of support at $1225 (Feb 21 low) could yield a pull back to $1192 (50-DMA).