GOLD Analysis – November 11, 2021

Gold’s Daily Price Analysis

Gold prices ended the day at $1850.60, with a high of $1870.35 and a low of $1824.05. Considering the strength of the US dollar, gold rose for the fifth straight session on Wednesday, reaching its highest level since mid-June. The US Dollar Index, which measures the value of the US dollar against a basket of six major currencies, ended a three-day bearish trend on Wednesday and rose to its highest mark since mid-July 2020 at 94.90.

United States Treasury Yield on the benchmark 10-year note rose on the day as well, reaching as high as 1.59 percent. The increasing US dollar index and Treasury yields added to the greenback's strength, weighing on the bullion and wiping off half of its daily gains. The announcement of the US Consumer Price Index, which surged for the year through October, boosted the US dollar. The CPI increased at the quickest rate since November 1990. This acceleration was driven mainly by rising fuel prices, which are at a seven-year high. According to the US Labor Department, the consumer price index, which represents a basket of things ranging from health care to fuel to rentals and groceries, increased by 6.2 percent in October.

Gold has traditionally been considered an inflation hedge, and the CPI figure issued on Wednesday suggested that inflation could continue unreasonably high well into 2022 due to clogged global supply chains. This helped gold gain ground versus the US dollar, and the yellow metal maintained its bullish surge for the fifth straight session, reaching its longest bullish streak since the first week of July when the market was up for seven days.

The market on Wednesday was surprising in that gold continued to rise even though the US 10-year Treasury Note yield rose by roughly 6% on the day. Treasury gold continued to rise throughout the day, as yields are a significant predictor of real interest rates, which often negatively connect with bullion. Markets were startled that the yield rally should have reduced bullion, but gold ended the day higher. It was primarily due to inflation reaching a 30-year high, which was music to gold speculators' ears, given that gold is frequently employed as a hedge against inflation.

On the statistics front, the CPI in October jumped to 0.9 percent against a projected 0.6 percent at 18:30 GMT, supporting the US dollar and limiting further advances in precious metals. The core CPI also increased to 0.6 percent, exceeding the expected 0.4 percent, bolstering the US currency and limiting gold prices. The increase in unemployment claims last week to 267K, vs the predicted 257K, weighed on the US dollar, driving up gold prices. At 20:00 GMT, final wholesale inventories had also risen to 1.4 percent, compared to the projected 1.1 percent, weighing on the US dollar and lifting gold higher on board.

Meanwhile, Mary Daly, President of the San Francisco Federal Reserve, stated that she expects excessive inflation to subside after COVID-19 is through. She also said that raising interest rates or hastening the Fed's bond-buying reduction would be premature. These remarks also aided bullion's bullish momentum, which helped it hit its highest level since mid-June on Wednesday.

GOLD Intraday Technical Level

Support Resistance

1826.31 1872.61

1802.03 1894.63

1780.01 1918.91

Pivot Point: 1848.33

GOLD - Technical Outlook

Gold prices continue to rise amid stronger inflation figures. Investors are buying gold as it’s considered an inflation hedge. Gold is trading at 1,846 levels right now, gaining immediate support at 1,833 levels along with pivot point resistance at 1,848 levels.

On the bullish side, the significant resistance stays at the 1,870 level, and closing below this level puts selling pressure on gold. However, the violation of this exposes gold prices towards the 1,892 and 1,917 levels. On the lower hand, gold’s immediate support stays at 1,824 and 1,800 levels.

On the 4-hour timeframe, gold has closed a bullish engulfing candle supporting a strong bullish bias in gold. Therefore, gold’s bullish bias remains strong over the 1,833 support level. All the best!