GOLD Analysis – September 24, 2021

Eyes on Fed Chair Powell Speaks

After hitting a high of $1777.05 and a low of $1737.70, gold prices settled at $1746.30. Despite a sharp decrease in the U.S. dollar, gold prices fell for the second consecutive session on Thursday, reaching their lowest level since August 11th.

On Thursday, the U.S. Dollar Index, which measures the dollar's value against a basket of six major currencies, fell to 92.98. On the other hand, 10-year Treasury yields soared on the day to their highest level since July 6th, 1.43 percent. The sharp increase in yield reflected market expectations for real inflation and how swiftly the Fed will have to respond to keep pressures under control.

The demand for high-yielding assets like Treasury Yields surged by more than 1.4 percent on Thursday after the Federal Reserve announced that it will terminate its pandemic-related stimulus support for the U.S. economy by the middle of next year and begin raising rates by the end of 2022. As a result, the price of non-yielding bullion fell by around 1.6 percent in a single day.

New forecasts from the Fed policy meeting revealed that half of the officials were prepared to raise interest rates next year due to strong inflation. Gold is typically considered a hedge against inflation, but a prospective interest rate hike raised the opportunity cost of owning gold because it pays no interest.

Fed Chair Jerome Powell has also stated that following November's policy meeting, the central bank might begin removing its $120 billion in asset purchases, as long as employment growth in the United States remained reasonably solid through September. However, a jump in the number of U.S. jobless claims from the previous week weighed heavily on the dollar on Thursday, limiting the yellow metal's downward pressure.

On the data front, last week's Unemployment Claims jumped to 351K against a forecast of 322K, weighing on the U.S. dollar and capping additional losses in the yellow metal at 17:30 GMT. The Flash Manufacturing PMI for September remained unchanged at 18:45 GMT, with forecasts of 60.7. In September, the Flash Services PMI fell to 54.4, below the predicted 55.1. At 19:00 GMT, the C.B. Leading Index jumped to 0.9 percent, well over the forecasted 0.7 percent, bolstering the U.S. dollar and adding to yellow metal price losses.

GOLD Intraday Technical Level

Support Resistance

1759.29 1782.29

1750.77 1796.77

1736.29 1805.29

Pivot Point: 1773.77

GOLD - Technical Outlook

At 1,750, gold is trading with a negative bias, with immediate resistance at 1,752. An intraday pivot point level is extending this level. The precious metal is trading with a selling bias on the 4-hourly timeframe, as it is trading below the 50-day SMA (simple moving average) at 1,771.

Gold's immediate support levels are 1,740 and 1,727 on the downside. Failure to break above the 1,752 level could lead to a gold sell-off. As a result, the 1,752 level will be the main focus. Gold's strong resistance remains at 1,766 and 1,782 levels on the higher side. Consider selling below 1,752 and buying above 1,752. All the best!