GOLD Analysis – September 27, 2021

Intraday Pivot Point to Underpin Gold at $1,749

Today in the Asian trading session, the safe-haven-metal price managed to extend its early-day upward rally and drew some additional bids around the $1,760 level as the latest declines in the U.S. dollar tend to underpin gold prices amid their inverse relationship with the price of gold.

In the meantime, the demand for physical gold in China, a top consumer, grew during the previous week as investors perceived safety in the safe-haven yellow metal as they monitored the ongoing situation at China Evergrande. Thus, it's seen as one of the factors that lent some support to the yellow metal prices.

Furthermore, the concerns over China Evergrande Group's (HK:3333) debt situation and its potential economic impact kept challenging the market's upbeat mood and boosted further the yellow-metal safe-have appeal. Furthermore, the bullish bias around the yellow-metal prices was also sponsored by the ongoing cautious sentiment ahead of the U.S. Durable Goods Orders, China's Evergrande, and U.S. stimulus headlines.

Alternatively, the market's upbeat mood, backed by multiple factors, put some burden on the safe-haven U.S. dollar. Thus, the weaker U.S. dollar tends to underpin gold prices, as the price of gold is negatively related to the price of the U.S. dollar. As of writing, the precious metal price is trading at 1,758.39 and consolidating in the range between 1,748.32 and 1,760.87.

The market's trading sentiment succeeded in extending its previous four-day upward performance and drew some further bids while refreshing the one-week high on the day. The S&P 500 Futures rose for the fourth day in a row to reclaim a one-week high, up 0.36% at around 4,461 at writing. However, the marker trading sentiment was buoyed by expectations of U.S. stimulus and positive coronavirus news from Australia and Japan. Furthermore, the chatter surrounding the release of Huawei's CFO and economic optimism and the fewer highlights over China's Evergrande also played a major role in supporting the market's trading sentiment.

The U.S. House Speaker Nancy Pelosi backed off from her first hints of a Monday vote on the U.S. infrastructure spending bill. However, her choice for Thursday and optimism over the passage tend to underpin the market's risk-on mood. Moreover, the expectations that the U.S. Democrats will use diplomatic power to reject Republicans if they stick to their demands over the debt limit as it expires on October 01 positively impacting the market's trading sentiment.

In addition to this, the Japanese media's decision to remove all the virus-led emergencies this week and the recent easing of COVID counts from Australia add further to the market's optimism. Meanwhile, China and Canada did a prisoner swap on the weekend, resulting in the release of Meng Wanzhou, daughter of Huawei's founder and the CFO of the company, eased the tension between the U.S. and China. These headlines also favour risk sentiment. Consequently, the buying bias surrounding the market's trading sentiment was a key factor that kept the U.S. dollar lower.

At the USD front, the greenback failed to stop its early-day declining streak and dropped further on the day as the market risk-on mood tends to undermine the safe-haven U.S. dollar. Meanwhile, the declines were further bolstered as U.S. 10-year Treasury yields eased from their highest since June, snapping a five-week uptrend. The U.S. Dollar Index tracks the U.S. dollar against a bucket of other currencies dropped by 0.12% to 93.222.

Looking forward, the global markets' traders will keep their eyes on the U.S. Durable Goods Orders, which are due for release later in the day. Meanwhile, China's Evergrande and U.S. stimulus headlines will also be key to watch.

GOLD Intraday Technical Level

Support Resistance

1741.16 1758.22

1732.28 1766.40

1724.10 1775.87

Pivot Point: 1749.37

GOLD - Technical Outlook

Gold is trading with a bullish bias at the 1,758 level, trying to break and close above a strong resistance level at the 1,757 level. On the resistance side, the metal’s immediate resistance will stay at 1,766 level, especially upon a breakout of 1,758 level. Further, on the higher side, a breakout of the 1,766 level exposes the pair towards the 1,775 level, which is being extended by a previous high level placed on September 23.

On the support side, the major support prevails around the 1,749 pivot point level and a breakout below this exposes a bearish bias until the 1,741 level. The RSI and stochastic are in an overbought zone now, thus gold has the potential to trigger a bearish correction until Monday at the 1,749 level. A breakout of the 1,761 level exposes gold towards 1,766 and 1,775. All the best!