Gold’s Daily Price Analysis
Gold prices ended the day at $1769.90, having reached a top of $1783.75 and a low of $1762.30. Gold fell to its lowest level since November 3rd, as the initial safe-haven demand for the metal spurred by concerns about the new coronavirus omicron type proved fleeting. Global shares rose for the day, with investors hoping that the Omicron variation would be mild and have little influence on the US economy's recovery. This lack of caution encouraged a risk-on mood and drove the greenback higher in choppy trade, pushing gold down with it. This lack of caution prompted a risk-on mood and drove the greenback higher in choppy trade, pushing gold down with it. This lack of caution encouraged a risk-on mood and drove the greenback higher in choppy trade, pushing gold down with it.
Nevertheless, the number of Americans filing new applications for unemployment benefits increased less than previously projected. The actual number of Americans claiming unemployment benefits was 222K, whereas the predicted amount was 238K. As a result, the US dollar rose in the market, putting additional pressure on precious metals.
The US Dollar Index, which measures the value of the US dollar against a basket of six major currencies, climbed for the second day in a row, reaching 96.18. Following a seven-day decrease, the US Treasury Yield on benchmark 10-year note changed tack and headed upward, recouping some of its previous daily losses after reaching 1.46 percent. Rising yields and the dollar's value put pressure on precious metals, driving gold lower.
After Fed Chairman Jerome Powell's comments triggered rate hikes, the market has seen some strength in US Treasury yields, which impacted the non-interest-bearing precious metal. The Omicron variant's forecasts will not impair the economic recovery as planned, and expectations that interest rates would increase sooner than expected piled severe pressure on gold on Thursday.
Furthermore, Atlanta Fed President Raphael Bostic stated that the central bank's bond-buying program should be terminated by the end of March to permit the Fed to raise interest rates to combat inflation.
San Francisco Fed President Mary Daly stated that Fed officials must always be prepared for many economic situations and that it was time to begin developing a strategy for raising interest rates to manage above-target inflation. These comments from several Fed officials also boosted the US dollar's strength and brought precious metals lower.
Market players are now looking forward to the US economic calendar, which will include the announcement of Challenger Job Cuts as well as the customary Weekly Initial Jobless Claims. This, together with remarks by important FOMC members, will have an impact on USD price dynamics and provide some support for the XAU/USD. Traders will also look for short-term opportunities in gold based on developments in the coronavirus crisis and broader market risk sentiment. The major focus, though, will remain on the release of the US monthly jobs report on Friday (NFP).
GOLD Intraday Technical Level
Support Resistance
1760.21 1781.66
1750.53 1793.43
1738.76 1803.11
Pivot Point: 1771.98
GOLD - Technical Outlook
Gold sharply fell to 1,761 levels and bounced off to trade above the pivot point level of 1,770. The bounce off has flipped the pivot point resistance into support. Therefore, the bullish bias dominates in gold. On the bullish side, the XAU/USD pair’s major resistance stays at 1,780, and further on the higher side, the next resistance can be found around 1,791.
On the bearish side, the support stays at 1,770 and violation of this exposes its price towards 1,761. While the RSI and Stoch RSI are both above 50, gold is in a bullish trend. Later today, the focus will be on the US non-farm payroll figures, as this typically triggers sharp price action in the market. All the best!
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