Technical Analysis

GOLD Analysis – September 22, 2021

By LonghornFX Technical Analysis
Sep 22, 20214 min

Get Ready for FOMC

After hitting a high of $1782.70 and a low of $1758.40, gold prices settled at $1758.40. The risk-off market attitude is fuelled by China Evergrande's financial problem. Moreover, investors' cautious behaviour ahead of the Fed's advice on reducing asset purchases and interest rate hikes helped gold prices extend their gains and settle higher for the second consecutive session.

The US Dollar Index (DXY), which measures the greenback's value against a basket of six major currencies, dipped on Tuesday to 93.05, putting pressure on the greenback and supporting the rise in gold prices. Despite better-than-expected macroeconomic statistics for the day, the US dollar remained under pressure on Tuesday, as a safe-haven appeal for gold remained higher amid Evergrande's debt issue in China.

Depending on how the scenario around Evergrande plays out in the market, gold is expected to continue to find safe-haven buyers. Market investors expect that the Chinese government will ease the issue by extending the deadline for the real estate behemoth. If this happens, the increased demand for bullion among investors will vanish as soon as it appears on the market.

Evergrande is a Chinese real estate behemoth with more than $300 billion in liabilities, making it the world's most indebted real estate business. Due to a major continuous fall in contract sales in the month, the firm's cash flow and liquidity position in the market has been impacted, and the company has announced that it may not be able to fulfil its debts due this month. If the real estate behemoth fails, it will have a massive influence on global businesses, lowering Chinese demand for worldwide goods, commodities, and services. As a result, markets worldwide will be affected, as China is a significant trading partner for over 100 countries.

The scenario surrounding Evergrande caused stock markets around the world to be shocked, and investors began buying safe-haven assets such as gold, which soared to $1782 per ounce. Meanwhile, despite higher data releases, the US dollar was under pressure on Tuesday due to investors' cautious conduct ahead of the Fed's cutting economic support. On Wednesday, the Fed is scheduled to disclose its monetary policy meeting decision from September's meeting. Investors were reluctant to place significant bids a day ahead of the announcement, keeping the greenback under pressure throughout the day, adding strength to yellow metal prices.

On the statistics front, the August Building Permits increased to 1.73 million against the anticipated 1.60 million, supporting the US dollar and capping further increases in gold prices at 17:30 GMT. The June Current Account revealed a deficit of -190 billion dollars vs. a forecast of -193 billion dollars, bolstering the dollar and limiting the rise in gold prices. Housing Starts increased to 1.62 million in August, compared to a forecast of 1.55 million, bolstering the US dollar and driving up gold prices.

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

The precious metals gold is trading with a bullish trend at 1,772, with immediate support at 1,771. An intraday pivot point is extending this support level, and gold has the ability to go surge above this. Thus, gold's next immediate resistance stays at 1,781 and 1,794 levels.

On the support side, the precious metal gold images support remains at the 1771 level, extended by an intraday pivot point level. On the bearish side, a breakout of the 1771 support level exposes gold price towards 1760. Overall, the primary focus will remain on the FOMC as it may help determine further trends in the XAU/USD today. All the best!


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