Pivot Point Breakout at 1,782
After reaching a top of $1797.35 and a bottom of $1757.95, gold prices settled at $1792.75 per ounce. Fears of an economic hit from rising energy prices, along with a drop in the US dollar as investors anticipated US inflation data, sent gold prices to their highest mark since September 16th.
On Wednesday, the US dollar index, which calculates the greenback's strength versus a basket of six major currencies, plummeted to a low of 94.0, owing to concerns about inflation. The benchmark 10-year Treasury yield fell to 1.530 percent, putting additional pressure on the US dollar and driving up yellow metal prices.
The recent U.S. consumer price index data, which confirmed growing inflation in the world's largest economy, appears to have sparked a rally in the yellow metal. In addition, the Federal Reserve's minutes confirmed that tapering would begin soon.
On the data front, the Consumer Price Index for September rose to 0.4 percent at 17:30 GMT, beating expectations of 0.3 percent, bolstering the US dollar, which capped additional advances in the yellow metal. The core CPI stayed unchanged at 0.2 percent, as expected.
According to the Federal Reserve's September policy meeting minutes, the central bank could begin tapering its crisis-era economic stimulus in mid-November or mid-December. They were, however, split on how much of a threat high inflation poses and how quickly interest rates should be raised in response.
According to inflation statistics issued on Wednesday, higher prices were not transient, and predictions of interest rate hikes sooner than expected surged amid these anxieties, keeping the yellow metal supported on Wednesday.
Participants at the FOMC meeting thought inflation risks could last longer than projected, particularly if labor and other supply constraints proved to be more persistent than predicted. Many participants agreed that the committee's price-stability target had been fulfilled and that tapering should begin immediately.
Participants voiced concern that monetary policy's intense level of accommodation, especially asset purchases, could exacerbate financial stability vulnerabilities. Other members stated that the substantial further development goal had yet to be realized and that this mixed feeling raised the level of uncertainty surrounding tapering and interest rate hikes, supporting the safe-haven yellow metal.
GOLD Intraday Technical Level
Support Resistance
1768.01 1807.41
1743.28 1822.08
1728.61 1846.81
Pivot Point: 1782.68
GOLD - Technical Outlook
Gold is now priced at $1,788 per ounce, but the market is approaching overbought territory. Gold's RSI was well above 80 on a 4-hour timeframe, indicating that it was overbought. However, it has begun to move out of the zone, undoubtedly resulting in a downward retracement in gold.
The 1,782 level, on the other hand, is gold's immediate support. If the 1,782 level is broken, a sell-off might ensue till the 1,774 and 1,768 levels are reached. On the upside, gold's following resistance levels remain at 1,798 and 1,806, respectively.
We might anticipate a bearish correction in bullion on Thursday, particularly below the 1,796 mark. Gold bullish bais dominates over 1,782 and vice versa. All the best!
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