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Technical Analysis

GOLD Analysis – January 14, 2022

Gold’s Daily Price Analysis

Gold prices ended the day at $1820.40, with a high of $1828.15 and a low of $1811.85. Despite falling US Treasury yields and a weak US currency, gold fell for the fourth consecutive session on Thursday. The US dollar index, which measures the greenback’s value against a basket of six major currencies, extended its fall and fell for the third straight day to 94.66, its three-month low. In the United States, the yield on the benchmark 10-year note fell to 1.69 percent, the lowest in six days.

On the statistics front, the Federal Budget Balance fell to-21.3 billion at 00:00 GMT, versus an anticipated 5.8 billion, supporting the US dollar. The PPI had also fallen to 0.2 percent at 18:30 GMT, versus the expected 0.4 percent, weighing on the US dollar. As expected, the core PPI remained unchanged at 0.5 percent. Unemployment claims increased to 230K from 199K predicted, weighing on the US dollar. The majority of data from the United States was unfavourable, which capped additional losses in gold prices.

On Thursday, Federal Reserve Governor Lael Brainard told Congress that the central bank’s most essential duty was to control inflation. Ms. Brainard raised the prospect of rate hikes by emphasising the central bank’s efforts to terminate its asset-buying stimulus programme by March.

According to her, the Fed’s rate-setting committee has advocated several rate hikes this year, but only if asset purchases are stopped as soon as possible. She stated that bottlenecks and other supply limitations contributed to considerably higher energy and food costs, but she added that the Fed was willing to raise interest rates to cool demand across the economy as needed to control inflation. She stated that the Fed possesses a powerful tool that will be used to reduce inflation over time. She also forecasted that the increased inflation rate would continue for the next couple of quarters. Ms. Brainard’s comments put more downward pressure on precious metals since increased inflation tends to increase demand for safe-haven assets.

Furthermore, the World Health Organization has added two more medications to its list of recommended coronavirus treatments, owing to the rapid spread of the Omicron type, which has increased the number of cases worldwide. Baricitinib was strongly recommended by agency experts for severe and critical COVID-19. The experts also issued a conditional recommendation for another medicine called Sotroviman for people with non-severe coronavirus infections but a significant risk of hospitalization. The rapid spread of the pandemic worldwide prompted the WHO to prescribe new treatments. The suggestion of new treatments boosted risk-on-market sentiment and pulled gold down even lower.

GOLD Intraday Technical Level

Support Resistance
1812.11 1828.41
1803.83 1836.43
1795.81 1844.71
Pivot Point: 1820.13

GOLD – Technical Outlook

Gold is trading at $1,826, with a strong positive bias, after breaching the resistance level of $1,815. This level serves as a support level for gold. Further to the upside, the next resistance level is at 1,832, and a break over this might push the gold price up to the 1,845 level. On the downside, support is still around 1,820, and a break below this level might extend the selling trend to the 1,804 level. All the best!