GOLD Analysis – September 06, 2021

Weaker Dollar Supports Gold

After hitting a high of $1836.90 and a low of $1810.90, gold prices settled at $1833.70. After lingering in consolidation for the previous four sessions, gold switched course and jumped on Friday. On Friday, gold reached a two-and-a-half-month high after climbing more than 1% on slower-than-expected U.S. employment growth in August, which weighed on the dollar and threw doubt on the Federal Reserve's tapering schedule.

The U.S. Dollar Index, which measures the dollar's value against a basket of six major currencies, remained weak on Friday, falling for the sixth straight session to 91.95, its lowest level in a month. On the other hand, the yield on the benchmark 10-year note in the United States climbed to 1.336 percent on Friday.

The highly anticipated labor data from the United States, which has been pushing the market for the past week, fell short of forecasts, showing that employers in the United States added around 235,000 jobs in August, less than a third of the 733,000 expected. August's low job numbers were attributable to the country's ongoing fight with the spread of Delta variations. The much-anticipated statistics failed to live up to investors' expectations who expected the report to come in on time and force the Fed to establish a firm schedule for tapering.

On the statistics front, the August Average Hourly Earnings soared to 0.6 percent against the forecasted 0.3 percent, supporting the U.S. dollar and capping any increases in gold prices at 17:30 GMT. The Non-Farm Employment Change fell to 235K from 720K expected, putting pressure on the U.S. dollar and increasing gold prices. In August, the unemployment rate stayed unchanged at 5.2 percent, as expected. The Final Services PMI, which came in at 55.1 at 18:45 GMT, was similarly aligned with expectations. The ISM Services PMI was again unchanged from the projected 61.7 at 19:00 GMT.

Jerome Powell stated that the timeline for tapering would be guided by job growth and the economy's recovery from the pandemic, but Friday's NFP data showed that job numbers had fallen due to the pandemic, putting pressure on the greenback, which ultimately pushed gold prices higher for the day, reaching multi-month highs.

Meanwhile, the greenback was maintained lower on Friday by the growing strength of the rival currency Euro against the U.S. dollar, adding to the precious metal's price increases. The Euro was strong versus competing currencies such as the U.S. dollar, owing to the prospect of higher Eurozone inflation and the ECB's withdrawal of stimulus. This puts even more pressure on the U.S. dollar, pushing gold prices even higher above the $1818 resistance mark.

GOLD Intraday Technical Level

Support Resistance

1828.96 1831.81

1827.88 1833.58

1826.11 1834.66

Pivot Point: 1830.73

GOLD - Technical Outlook

The precious metal continues to consolidate in a wide trading range of 1,833 – 1,823 level. On Monday, the bullish bias continued to dominate the market. Gold’s immediate resistance stays at the 1,833 level and a bullish breakout of this level exposes the precious metal gold towards 1,837 and 1,848 levels. On the support side, the metal’s immediate support stays at the 1,823 level and a breakout below 1,823 exposes the pair towards the 1,812 level.

Gold is trading on fundamentals and Asian investors seem to have priced in worse than expected US nonfarm payroll data. The RSI is holding in a selling zone now, while the pivot point continues to support gold at the 1,823 level. All the best!