GOLD Analysis – September 28, 2021

Symmetrical Triangle in Focus

During Tuesday's Asian trading hours, the yellow-metal price managed to stop its early-day downticks and drew some mild bids around above the $1,750 level. However, the buying trend around the yellow-metal prices was mainly sponsored by the worries over China's Evergrande debt crisis and infrastructures spending bill, which probes the market's optimism and contributes to the safe-haven metal gains. However, the gains in the yellow metal could be short-lived amid a stronger U.S. dollar.

The U.S. dollar traded strongly near 92.50 as hopes over the interest rate hikes following hawkish Fed's officials tend to underpin the U.S. currency. The gains in the U.S. dollar were further bolstered by the rising U.S. Treasury yields, which capped the yellow metal's gains. On the other hand, the market's upbeat mood, backed by multiple factors, was seen as one of the key factors that kept the lid on any additional gains in the yellow metal prices. As of writing, the precious metal price is trading at 1,749.99 and consolidating in the range between 1,749.38 - 1,752.35.

The reason could be tied to the mixed concerns over U.S. stimulus and debt-limit talks. Earlier in the morning, U.S. Treasury Secretary Janet Yellen pushed for a swift address to the debt limit issue. This came after the Senate failed to advance a measure to suspend the federal debt ceiling and avoid a partial government shutdown.

As per U.S. Senate Democratic Leader Chuck Schumer, Democrats will take further action this week to avoid a government shutdown and debt default. Moreover, House Speaker Nancy Pelosi showed readiness to stop the deadlock of the U.S. infrastructure stimulus bill the previous day but hinted at a lesser figure than President Joe Biden's $3.5 trillion push. However, the prevalent selling bias surrounding the market's trading sentiment was a key factor that helped the gold prices stay bid.

Despite the mixed market sentiment, the broad-based U.S. dollar succeeded in extending its early-day bullish bias and hitting an intra-day high of around 93.433. The U.S. dollar was being supported by hopes of interest rate hikes following hawkish Fed officials. Meanwhile, the benchmark 10-year U.S. yield upticks point to some additional positive impact on the U.S. dollar. The benchmark 10-year U.S. yield rose 1.5% on Monday, a level not seen since June 2021, and the two-year yield climbed to its highest since March 2020.

However, the gains in U.S. yields were mainly attributable to the U.S. Federal Reserve's more hawkish stance in its latest monetary policy, which was handed down during the previous week. Thus, the bullish sentiment surrounding the U.S. dollar was seen as a significant factor that kept the gold price gains under check, as the price of gold is inversely related to the price of the U.S. dollar.

Moving on, market traders will keep their eyes on the actual testimony by Fed Chair Powell. In the meantime, the speech from the European Central Bank (ECB) President Christine Lagarde and developments concerning the issues above will also be essential to watch.

GOLD Intraday Technical Level

Support Resistance

1743.61 1759.76

1736.08 1768.38

1727.46 1775.91

Pivot Point: 1752.23

GOLD - Technical Outlook

Gold is trading with a bearish bias at the 1,747 level, trying to break and close below an intraday pivot point level of 1,751. The closing of candles below this level supports a selling trend in gold. However, gold's immediate support prevails at 1,744, and breakout below this level exposes the precious metal towards the 1,735 and 1,726 levels.

On the 4-hour timeframe, gold has formed a symmetrical triangle pattern supporting indecision among investors amid the lack of high-impact economic events. The resistance levels continue to hold around 1,751 and 1,758 levels. Upon a bullish breakout above the 1,758 level, the gold price will be exposed towards 1,767 and 1,775 levels. On Wednesday, the bearish bias dominates below 1,751. All the best!