GOLD Analysis – December 17, 2021

Gold’s Daily Price Analysis

Gold prices were closed at $1798.20 after setting a high of $1800.70 and a low of $1775.70. Gold reversed course and moved higher on Thursday amid the persistent weakness of the US dollar. Gold moved up to the $1800 level on Thursday after the US dollar came under pressure amid the latest decision by the US Federal Reserve to speed up the withdrawal of its pandemic-era stimulus. This decision raised the market's risk sentiment and weighed on the safe-haven US dollar, which ultimately pushed gold higher as both have a negative correlation.

The US Dollar Index, which measures the greenback's value against the basket of six major currencies, fell for the second consecutive session and extended its decline to drop lower at 95.85. While the US Treasury Yield on the benchmark 10-year note fell on Thursday to 1.41%, dragging the greenback lower and helping to push yellow metal higher.

At 18:30 GMT, the Philadelphia Fed Manufacturing Index declined to 15.4 from the forecasted 29.6 and weighed on the US dollar on the data front. Unemployment claims increased to 206K from 196K expected, weighing on the dollar. Building permits increased to 1.71 million from 1.66 million expected, bolstering the US dollar. Housing starts increased to 1.68 million, exceeding the 1.57 million predicted, bolstering the US dollar. At 19:15 GMT, industrial production declined by 0.5%, against an expected 0.6%, and weighed on the US dollar.

The capacity utilization rate remained flat at 76.9%, as projected. At 19:45 GMT, the Flash Manufacturing PMI dropped to 57.8 from the anticipated 58.6 and weighed on the US dollar. The Flash Services PMI also declined to 57.5 from the predicted 58.9 and weighed the US dollar. Most of the economic data from the US was unfavorable, which dragged the US dollar and helped gold recover its previous losses on Thursday.

Furthermore, the rising prices of gold could also be attributed to the surprise rate hike delivered by the Bank of England on Thursday, which became the first central bank in the world to announce a rate hike in the aftermath of the coronavirus pandemic that damaged the global economy nearly two years ago. The Bank of England, along with the Federal Reserve, has warned that inflation unleashed by the pandemic was the one thing they had not expected. 1791.53 is the pivot point.

GOLD Intraday Technical Level

Support Resistance

1782.36 1807.36

1766.53 1816.53

1757.36 1832.36

Pivot Point: 1791.53

GOLD - Technical Outlook

On Friday, gold traded substantially higher at 1,803, breaching the bearish trendline at 1,789. Gold is likely to find quick support at the 1,789 level in 2 hours. The closure of candles above this level indicates that gold is rising.

Gold’s next resistance stays on the upside at 1,814 levels. At the same time, a break over the 1,814 barriers might expose the gold price up to 1,829. The RSI and Stoch are signaling uptrend in gold. All the best!