GOLD Analysis – September 08, 2021

Bullish Greenback Triggers Sell-off in Gold

After hitting a high of $1829.40 and a low of $1793.95, gold prices settled at $1797.55. Gold continued to lose ground, falling below $1800 for the third straight session. Gold fell more than 1.5 percent in a single day, its most significant intraday decrease in a month, as demand for the US dollar increased and Treasury yields increased.

The US Dollar Index (DEX), which measures the dollar's value against a basket of six major currencies, ended a seven-day losing trend by rising 0.5 percent to 92.5, recouping some of its prior losses. The yield on the benchmark 10-year note in the United States also rose on Tuesday, reaching 1.38 percent, its highest level since mid-July. The desire for safe-haven gold was stifled by a stronger dollar and rising US yields, pulling gold prices below $1800.

Gold slid further from its two-and-a-half-month high set on Friday, following a shockingly weak August payroll data that fueled speculation that the Fed may delay the tapering of its bond purchases. The market's attention has now shifted to the European Central Bank's meeting on Thursday, where officials are expected to begin debating whether or not to begin pulling back stimulus measures as the eurozone economy recovers from the pandemic.

Gold is seen as a safe haven against currency depreciation and inflation due to significant stimulus efforts. The prospect of central banks reducing their stimulus measures throughout the world hurts bullion's appeal, and gold has fallen as a result. Another factor contributing to the precious metal's decline could be the market's nervousness due to gold's failed attempt to break above its primary area of resistance around the $1835 level.

Nevertheless, as per Johns Hopkins University, the total number of people infected with the coronavirus has surpassed 221 million, with a mortality toll of over 4.57 million. With 40 million cases of the disease and approximately 650,000 deaths, the United States leads the globe. Only 53% of the country's population is fully vaccinated against COVID-19, putting the remaining 47% at risk of serious disease and death. For the first time since March, the country was averaging more than 1500 deaths each day, according to a New York Times tracker, and the daily case count has surged fivefold since the beginning of August.

For the first time since March, the nation was averaging more than 1500 deaths each day, as per a New York Times tracker, and the daily case count has surged fivefold since the beginning of August.

The Fed refrained from providing a firm schedule for the withdrawal of stimulus measures due to the poor developments on the coronavirus front in the United States. The development of the Delta form of coronavirus has triggered the country's third wave, which has impacted the country's job market and weighed on the dollar. Despite these unfavorable developments, the dollar managed to stay green for the day despite the lack of macroeconomic data and continued to weigh on the precious metal.

GOLD Intraday Technical Level

Support Resistance

1784.54 1819.99

1771.52 1842.42

1749.09 1855.44

Pivot Point: 1806.97

GOLD - Technical Outlook

On Wednesday, the precious metal gold was trading with a bearish trend at the 1,799 level. Taking a look at the 4-hour timeframe, the precious metal gold is holding in an oversold zone, which means that the investors are getting exhausted, and the bulls may enter the market very soon.

Gold is facing immediate support at the 1,792 level, and a bearish breakout of this level exposes gold prices towards the next support level of 1,781 and 1,769. On the other side, gold's immediate resistance stays at the 1,804 level, and in case of a bullish breakout, gold prices will be exposed towards the next resistance level of 1,816 and 1,827 levels.

In the 4-hour timeframe, gold has violated an upward trendline, suggesting a solid bearish market trend. Furthermore, since gold has entered the oversold zone, we can expect a slight bullish correction in the precious metal today. Lastly, let's watch the 1,804 level as bullish bias dominates above this and vice versa. All the best!