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Technical Analysis

GOLD Analysis – January 20, 2022

Gold’s Daily Price Analysis

Gold prices were closed at $1839.15 after hitting a high of $1843.80 and a low of $1809.45. On Wednesday, gold reversed course and surged to its highest level since November 22nd. On Wednesday, gold posted its best daily gain in more than three months as the US dollar fell and the precious metal began to gain traction as a result of increased safe-haven appeal driven by increased geopolitical tensions surrounding Ukraine.

The US Dollar Index, which measures the greenback’s value against a basket of six major currencies, broke its 3-day bullish streak and dropped on Wednesday to as low as 95.49. Treasury yields on the benchmark 10-year note reached their highest level since January 2020, at 1.90 percent, before falling back to 1.85%, triggering a sell-off that provided some support to the precious metal.

The yellow metal gained on its safe-haven bets on the back of increased tensions surrounding Ukraine. On Tuesday, the White House warned that Russia was ready to attack Ukraine at any point. This statement came before a meeting between the top US and Russian diplomats. Ukraine, the US, and European countries have raised deep concerns over Russia’s plans to build on the border, despite repeated denials from Moscow that an invasion was planned. The rising tensions surrounding the border between Russia and Ukraine increased the safe-haven appeal and pushed gold higher in the market.

At 02:00 GMT, the TIC Long-Term Purchases surged to 137.4B against the forecasted 37.6B and supported the US dollar on the data front. At 18:30 GMT, building permits had risen to 1.87 million from 1.71 million expected, bolstering the US dollar. Housing starts increased to 1.70 million, exceeding the 1.65 million predicted, bolstering the US dollar. All the data from the US came in favour of the dollar, but it failed to stop precious metal gains on Wednesday.

Recently, gold has been under pressure amid hopes that the US Federal Reserve will increase interest rates 3–4 times this year. The Federal Reserve of the United States will hold a policy meeting next week, and market participants were looking for clues about a rate hike timeline. This thing was keeping the US dollar higher in the market. However, on Wednesday, after the warning from the White House that Russia could attack Ukraine, the whole market mood turned negative. The risk-off market sentiment pushed gold higher due to its safe-haven status.

GOLD Intraday Technical Level

Support Resistance
1817.80 1852.15
1796.45 1865.15
1783.45 1886.50
Pivot Point: 1830.80

GOLD – Technical Outlook

On Thursday, the yellow metal gold (XAU/USD) was trading at the 1,840 mark with a strong bullish bias. It has broken through a big triple top resistance level of 1,829 and is on its way to the next target mark of 1,850. On the upside, the next key resistance for the XAU/USD might be found at the 1,865 mark. On the downside, support remains near the 1,829 mark, and a break of this level exposes gold to 1,809. Gold’s bullish bias remains strong above the 1,829 level. All the best!