GOLD Analysis – September 13, 2021

Pivot Point Level to Support Gold at $1,792

After hitting a high of $1806.00 and a low of $1788.20, gold prices settled at $1792.10. Gold prices fell on Friday as the US currency strengthened.

The US Dollar Index, which measures the greenback's value against a basket of six major currencies, jumped to 92.6, bolstering the US dollar and putting downward pressure on gold prices. The 10-year Treasury yield climbed higher on Friday, reaching 1.35 percent, adding to the dollar's strength and weighing on gold prices.

Uncertainty about the US Federal Reserve's tapering plan was another factor in gold's decline, putting most investors on the sidelines. After economic statistics showed that high inflation could linger for some time, the yield on the benchmark 10-year note in the United States remained high. Because gold is considered an inflation hedge, higher yields indicate a higher opportunity cost for storing non-yielding bullion, which kept the yellow metal under pressure.

Gold fell for the first time in five weeks, owing to macroeconomic data showing that producer prices in the United States climbed by 8.3% in August, the highest level in almost a decade. This increase in costs could be attributed to persistent inflationary pressure in an economy still recovering from the effects of the coronavirus outbreak. The Fed's stimulus program and other monetary accommodations have been blamed for the increased pricing pressures in the United States.

The central bank has been buying $120 billion in bonds and other assets to bolster the economy since the COVID-19 outbreak in March 2020. For the past 18 months, the bank has kept its interest rates at near-zero levels.

The Fed's reduction of stimulus measures has been a fiercely discussed topic recently, as the emergence of the Delta coronavirus has hampered the economy's recovery. However, the case for tapering became less compelling as August employment growth fell 70 percent short of economists' expectations.

On the data front, the PPI for August rose to 0.7 percent against the predicted 0.6 percent at 17:30 GMT, bolstering the US dollar and adding to the decline in gold prices. In August, the Core PPI jumped to 0.6 percent, up from the forecasted 0.5 percent, bolstering the US dollar and accelerating the decrease in yellow metal prices. Final Wholesale Inventories remained unchanged at 19:00 GMT, with predictions of 0.6 percent.

GOLD Intraday Technical Level

Support Resistance

1788.06 1789.86

1787.38 1790.98

1786.26 1791.66

Pivot Point: 1789.18

GOLD - Technical Outlook

The precious metal gold is trading with a bullish bias, holding above a pivot point trading level of 1,789. Gold, on the other hand, is expected to find immediate support near 1,782. The breakout at the 1,782 level exposes gold price towards next support level of 1,776, and below this, the next support will prevail around the 1,765 level.

The pair's immediate resistance stays at the 1,792 level. In the event of a bullish breakout, gold prices will be exposed to the 1,798 level, with the next resistance located around the 1,811 level. In the 4-hour time frame, the 50-period exponential moving average is likely to extend resistance around the 1,811 level. The closing of candles below 1,792 suggests a bearish bias in the precious metal gold. Lastly, the RSI indicates a bearish bias in gold. Thus, gold's bearish bias remains strong below the 1,794 level and vice versa. All the best!