GOLD Analysis – September 20, 2021

Gold to Exhibit Bullish Retracement

After hitting a high of $1767.80 and a low of $1747.10, gold prices settled at $1751.40. Gold fell for the third day in a row and continued lower on Friday, despite renewed dollar strength.

The greenback was at an all-time high on Friday, reaching 93.25, its highest level since August 28th. The yield on the benchmark 10-year note in the United States continued to rise on Friday, reaching 1.38 percent.

Due to the strengthening of the US dollar, gold suffered its greatest weekly loss in six years. The dollar stayed near a three-week high versus a basket of six major currencies as investors awaited the outcome of a key US Federal Reserve meeting for hints on when the central bank may begin unwinding its stimulus programme.

On September 21 and 22, the Federal Open Market Committee will hold a two-day policy meeting, and investors will be looking for hints as to when the US central bank would begin removing its asset purchases.

Reduced central bank stimulus tends to raise bond yields, increasing the potential cost of storing non-interest bearing bullion, therefore these forecasts pushed the yellow metal lower for the day. It also serves to raise demand for the dollar, which impacted on the yellow metal even more.

After the announcement of U.S. Retail Sales, which unexpectedly climbed in August and knocked down forecasts for a dramatic slowdown in economic growth in the third quarter, the dollar surged as well.

On the statistics front, the TIC Long-Term Purchases in July fell to 2.0 billion against a projection of 60.5 billion at 01:00 GMT, weighing on the US Dollar and causing further losses in gold prices. The Prelim UoM Consumer Sentiment fell to 71.0 from 71.9 expected at 19:00 GMT, weighing on the US dollar and limiting the slide in gold prices. The Prelim UoM Inflation Expectation for September increased to 4.7 percent from 4.6 percent previously.

Despite weaker-than-expected macroeconomic data on Friday, the greenback remained strong on the basis of rising prospects of Fed tapering at the forthcoming policy meeting.

GOLD Intraday Technical Level

Support Resistance

1751.85 1756.00

1749.45 1757.75

1747.70 1760.15

Pivot Point: 1753.60

GOLD - Technical Outlook

On Monday, precious metal gold has bounced off about the support level of 1,745, and now it's heading towards an intraday pivot point level of 1,753. Furthermore, a bullish breakout of 1,753 levels exposes gold prices towards the next resistance level of 1,765. Moreover, gold me find next resistance at 1,776 level.

On the support side, the breakout of 1,745 support exposes gold prices towards 1,736 and 1,724 levels. The RSI and Stochastic indicators are in the mixed zone, and typically this can drive a bullish or a bearish trend in the gold price depending upon market fundamentals. Overall, gold's bullish bias dominates over 1,745 and vice versa. All the best!