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Technical Analysis

GOLD Analysis – September 15, 2021

Weaker CPI Triggers Bullish Trend in Gold

After reaching a high of $1810.65 and a low of $1783.35, gold prices were closed at $1805.65. Following the long-awaited U.S. CPI report disappointed investors, gold rallied on Tuesday and gained momentum against the dollar.

On Tuesday, gold reached a one-week high after the CPI report showed a slower-than-expected rise in U.S. inflation, adding to the uncertainty over the Federal Reserve’s plan for reducing monetary support. According to several analysts, the reading allayed fears of out-of-control inflation and backed up the Fed’s prediction that the elevated price pressures witnessed since the beginning of the year would drop by the fourth quarter.

On the data front, the NFIB Small Business Index rose to 100.1 in August against a forecast of 99.0, bolstering the U.S. dollar and capping further gains in gold prices at 15:00 GMT. IN AUGUST, the CPI fell to 0.3 percent, vs. an anticipated 0.4 percent, weighing on the U.S. dollar and adding to precious metals advances. The Core CPI fell to 0.1 percent in August versus a forecast of 0.3 percent, putting pressure on the U.S. currency and pushing gold prices higher.

The inflation report could also indicate that the Fed will take its time dismantling economic stimulus measures and keep interest rates low. This might be good news for precious metals because it indicates the Fed is less likely to announce economic stimulus cuts at its September meeting.

For a long time, the Fed’s stimulus program and reduced interest rates have kept price pressures in the United States strong. The U.S. dollar has been weighed down by $120 billion in bond buying since March 2020, as well as near-zero interest rates for the past 18 months, driving gold prices to linger at $1800.

The U.S. economy shrank by 3.5 percent in 2020 due to business closures caused by the coronavirus outbreak. However, the U.S. economy expanded by 6.5 percent in the second quarter of 2021, according to the Federal Reserve’s predictions. The Fed’s decision to cut economic support was fuelled by increased optimism that the recovery was gaining steam. However, some inflation and employment figures imply that the Fed may defer such a decision, driving gold higher these days.

GOLD Intraday Technical Level

Support Resistance
1789.11 1816.41
1772.58 1827.18
1761.81 1843.71
Pivot Point: 1799.88

GOLD – Technical Outlook

On Wednesday, the precious metal gold was trading at 1,803 levels with a bullish bias.Gold’s immediate resistance stays at the 1,808 level, and a bullish breakout at 1,808 exposes the pair towards the next resistance level of 1,815. Further, on the higher side, the next resistance prevails at the 1,826 level.
On the support side, gold’s immediate support prevails at the 1,797 level, and a breakout below this level exposes the metal towards the 1,786 level. The leading technical indicator like Stocahstic RSI is suggesting a bullish bias in gold. Thus, the bullish bias dominates over the 1,797 level and vice versa. All the best!