Technical Analysis

GOLD Analysis – September 01, 2021

By LonghornFX Technical Analysis
Sep 1, 20214 min

Choppy Sessions in Play

Gold finished the day at $1817.15, with a top of $1821.85 and a low of $1803.75. On the strength of the day's weak U.S. dollar, gold went green on Tuesday, recouping some of its prior daily losses. The U.S. Dollar Index, which gauges the dollar's value against a basket of six major currencies, fell for the third straight session on Tuesday, reaching 92.40, its lowest level in 18 days. On the other hand, the yield on the benchmark 10-year note in the United States climbed to 1.316 percent on Tuesday.

The dollar came under pressure last week due to Fed Chairman Jerome Powell's dovish remarks at the Jackson Hole Symposium. Powell did not give any indication of when the central bank will begin tapering. The dollar was put under more pressure due to Powell's comments, and investors are now anticipating the release of the U.S. nonfarm payrolls data on Friday.

Investors feel that the NFP report will be crucial in the Federal Reserve's decision on whether or not to taper its stimulus programs. The market anticipates an increase of 728,000 jobs, a drop in the unemployment rate to 5.2 percent, and a 0.4 percent increase in average hourly earnings every month. If job creation meets or exceeds market estimates, it might be a game-changer, prompting the central bank to begin tapering faster than planned. However, if the data fall short of expectations, the dollar may suffer another bout of weakness, pushing the price of gold even higher towards $1900.

Gold gained 0.3 percent on the last trading day of August, and the fascinating thing was that the precious metal concluded the month with the same amount of gains. The good news is that gold managed to finish its monthly trading session above the $1800 barrier, indicating that it can cross the $1900 mark if the dollar's weakening continues. However, there was no evidence that these favorable stances were embraced in the market, and everyone's attention was drawn to the Fed's reduction of monetary assistance. Furthermore, the market's attention has switched this week to nonfarm payroll data.

On the data front, the Housing Price Index for June fell to 1.6 percent against a forecast of 1.9 percent at 18:00 GMT, weighing on the dollar and adding to gold's gains. The S&P/CS Composite-20 HPI for the year jumped to 19.1%, beating expectations of 18.7%, bolstering the U.S. dollar, and capping further advances in gold prices. For August, the Chicago PMI fell to 66.8 against a forecast of 68.0 at 18:45 GMT, weighing on the U.S. dollar and pushing yellow metal even higher. The C.B. Consumer Confidence Index fell to 113.8 from 122.9 expected at 19:00 GMT, weighing on the U.S. dollar and adding to yellow metal's gains in Tuesday's trading session.

GOLD Intraday Technical Level

Support Resistance

1806.65 1824.75

1796.15 1832.35

1788.55 1842.85

Pivot Point: 1814.25

GOLD - Technical Outlook

Gold is trading sideways, as its technical outlook hasn’t changed so far. Gold is trading with a neutral bias at the 1,815 level, heading north to retest the resistance level of 1,819. However, the metal entered the overbought zone, and now it's experiencing a bearish correction below 1,823 resistance levels. On the lower side, gold's immediate support prevails at 1,813, 1,807, and 1,795 levels. Furthermore, the bearish breakout of the 1,795 level exposes gold prices towards the 1,785 level.

On the higher side, the breakout of the 1,821 resistance level exposes the metal towards 1,829 and 1,841 levels. On the hourly timeframe, the RSI level is holding in a selling zone. Thus, the odds of a selling bias remain strong until the 1,807 level. The bullish bias remains strong above the 1,807 level and vice versa. All the best.


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