Pivot Point Breakout at 1,796
Gold prices ended the day at $1796.30, having reached a top of $1815.50 and a low of $1783.40. Due to a weak US dollar and dropping US Treasury yields, gold prices have surged to their highest level since September 7th.
The weakening US dollar, along with mounting inflationary pressures, appeared to enhance gold's safe-haven appeal, pushing its price to a 5-week high. Gold had another bullish week as the dollar continued to fall despite rising inflation predictions.
The US Dollar Index, which measures the greenback's value against a basket of six major currencies, dipped to 93.54 on Friday, weighing on the greenback. The US Treasury Yields broke a six-day bullish trend on Friday, falling as low as 1.63 percent, dragging down the US dollar and eventually supporting rising gold prices.
On the data front, at 18:45 GMT, the Flash Manufacturing PMI for October fell to 59.2 from the predicted 60.5, weighing on the US dollar and adding to precious metals advances. The Flash Services PMI increased to 58.2 from 55.3, supporting the US dollar and limiting further advances in gold prices. The Federal Budget Balance for September remained steady at 22:58 GMT, with forecasts of -61.5B.
Furthermore, San Francisco Federal Reserve Bank President Mary Daly stated on Friday that monetary policy could do little to alleviate or offset climate risks, even though the central bank does not need to factor those risks into its economic predictions and longer-term prognosis.
While Fed Chair Jerome Powell suggested on Friday that the US central bank should begin decreasing its economic support by reducing asset purchases, interest rates should not be raised at this time.
He stated that there were still 5 million jobs available that were not available before the outbreak. He went on to say that rising inflation will likely fall next year as the effects of the pandemic diminish.
He was optimistic that the Fed's employment objective would be met next year and that supply limitations would eventually ease, allowing job growth to accelerate again. These comments from the Fed's chairman boosted bullion prices, sending them to a five-week high on Friday.
GOLD Intraday Technical Level
Pivot Point: 1794.67
GOLD - Technical Outlook
Gold continues to trade bullish and is now priced at $1,798 per ounce. Technically, gold is trading with a bullish bias above the pivot point support level of 1,796. The odds of a bullish trend continuation seem probable as the metal has closed with a bullish engulfing candle above the pivot point mark.
Moreover, the technical side of gold suggests a bullish bias as RSI is still holding above 50 on a 4-hour timeframe. Gold’s immediate support prevails at 1,796 and below this, the next support holds around 1,782 and 1,778.
On the bullish side, gold’s next resistance stays at 1,809, and a breakout of this exposes gold's price towards 1,827. Bullish bias dominates over 1,796 and vice versa. All the best!
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