GOLD Analysis – September 16, 2021

XAU/USD Breaking Below 1,790 Support

After hitting a high of $1808.45 and a low of $1791.75, gold prices settled at $1795.95. Despite the current weakness in the U.S. dollar, gold went red on Wednesday after climbing for two consecutive sessions. On Wednesday, the U.S. Dollar Index (DXY), which gauges the dollar's value against a range of six major currencies, fell to 92.42, giving up all of its prior daily gains. While 10-year Treasury yields on 10-year notes jumped to 1.32 percent for the day, supporting the U.S. currency but driving gold prices down.

On Wednesday, the yellow metal plummeted below $1800 after U.S. Treasury Yields jumped by more than 2.1 percent in a single day, boosting the opportunity cost for traders holding non-yielding gold and increasing selling pressure.

The recent rise in Treasury yields can be ascribed to a positive Empire State survey, which suggested that manufacturing growth might not be as bad as previously thought. This news comes after the Federal Reserve announced last week that industrial production increased by 0.4 percent in August, compared to 0.8 percent in July. According to several researchers, the recent drop in industrial production caused factory outages caused by Hurricane Ida, which hampered operations.

For September, the Empire State Manufacturing Index rose to 34.3 from 18.1 expected at 17:30 GMT, bolstering the U.S. dollar and adding to further declines in gold prices. Import prices fell by 0.3 percent in August versus a forecast of 0.3 percent, putting pressure on the U.S. dollar, which led to a further drop in gold prices. At 18:15 GMT, industrial production in August fell by 0.4 percent, vs. an anticipated 0.5 percent reduction, putting pressure on the U.S. dollar, which reduced the decline in gold. In August, the Capacity Utilization Rate stayed unchanged at 76.4 percent, as expected.

Meanwhile, consumer prices in the United States climbed at the slowest rate in six months in August, confirming the Fed's initial belief that high inflation levels were only temporary. The data also suggested that the Fed would take its time withdrawing economic stimulus and maintain interest rates near zero for a while.

Investors' attention has now switched to the Federal Reserve's scheduled two-day monetary policy meeting the week after next. Investors are now waiting for signals about tapering during the meeting, which is dragging on the market.

GOLD Intraday Technical Level

Support Resistance

1788.99 1805.69

1782.02 1815.42

1772.29 1822.39

Pivot Point: 1798.72

GOLD - Technical Outlook 

On Thursday, the precious metal gold is trading at 1,787 levels, having violated the support level of 1,790 level. On the lower side, the precious metal gold's immediate support prevails at 1,787 level and a bearish breakout below this level exposes the metal towards 1,780 level.

On the resistance side, the immediate resistance stays at 1,790, and above this, the daily pivot point may extend resistance at the 1,796 level. Recently, gold has closed three black crows patterns on an hourly timeframe. It's demonstrating strong selling bias among investors. Thus, the metal has the potential to go after 1,780 level upon breakout of 1,787 support level. The RSI and Stochastic support bearish bias in gold. All the best!

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 Stochastic RSI suggests a bullish bias in gold. Thus, the bullish bias dominates over the 1,797 level and vice versa. All the best!