Gold’s Daily Price Analysis
Gold finished the day at $1804.05, having reached a top of $1832.50 and a low of $1802.95. Gold prices began the New Year with a dramatic drop, giving up all of their previous two-session gains on Monday, despite surging markets and higher bond yields. On Monday, the 10-year US Treasury note yield jumped to 1.64 percent, its highest level since November 24, 2021.
Rising bond yields increased the potential cost of owning non-interest-paying precious metals, putting downward pressure on their prices. The US Dollar Index, which measures the value of the US dollar against a basket of six major currencies, was also quite high on Monday, reaching 96.33. The strengthening of the US dollar then contributed to the bearish pressure on gold, causing it to fall in price on Monday.
Gold declined the most in six weeks as traders braced for monetary policy tightening in 2022, owing to the strengthening of the dollar and higher yields. The rise in Treasury yields came as investors became more optimistic about the long-term prospects for the US economy, despite the persistent concerns posed by the Omicron strain of the coronavirus. Treasury rates in the United States increased by 12 basis points on Monday, the greatest one-day increase since 2009. It means that the Ten-Year Bond Yield had its greatest start to a year in more than a decade, which weighed significantly on gold prices because the two have a negative association. Raising anticipation of Federal Reserve rate hikes to combat inflation was another factor supporting the strength of rates and the greenback.
The Fed's December monetary policy meeting minutes are expected to be released. The minutes will reveal an accelerated timeline for the conclusion of the pandemic-era stimulus. The central bank has stated that interest rates may be raised three times in 2022. However, that will be contingent on sustaining inflation at 2% per year and employment at the desired level of roughly 4%, a measure of full employment. Reports of rate hikes always have a negative impact on gold prices; however, if inflation persists and remains robust throughout 2022, gold might return and potentially retrace 2020's record highs beyond $2100. On the data front, the final manufacturing PMI stayed unchanged at 57.7 at 19:45 GMT. At 20:00 GMT, construction spending in the United States fell by 0.4 percent in November, compared to the projected 0.8 percent, weighing on the US currency and causing gold prices to fall further on Monday.
GOLD Intraday Technical Level
Support Resistance
1790.76 1824.91
1777.48 1845.78
1756.61 1859.06
Pivot Point: 1811.63
GOLD - Technical Outlook
Gold is trading slightly bullish at 1,798, exhibiting a bullish correction after testing the 1,798 support zone. On the 4-hourly chart, the XAU/USD coin is facing immediate resistance at 1,810, which is being extended by an intraday pivot point level. The closing of candles below this resistance level suggests a downtrend in gold; on the lower side, the significant support stays at 1,798 and 1,789. A bullish break above 1,811 exposes the metal toward the 1,822 mark.
A break below the 1,798 level, on the other hand, exposes the XAU/USD to the 1,789 or 1,776 support zone. Further on the lower side, the next support level prevails at the 1,755 level. Bearish bias seems to dominate below 1,810 and vice versa. All the best!
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