Gold – XAU/USD Analysis - April 14, 2021

Pivot Point Supports At $1,739

The yellow metal gold prices were closed at 1746.95 after placing a high of 1749.50 and a low of 1723.35. After dropping for two consecutive days, gold advanced on Tuesday and recovered some of its previous losses amid the declining U.S. treasury yields and US CPI data release. The solid demand for a 30-year bond auction weighed on the U.S. treasury yields and flattened the yield curve. The Benchmark 10-year yields fell by 5.8 basis points and reached 1.618%, while the 30-year yield dropped by five basis points and reached 2.2977%. The declining U.S. Treasury yields added weight on the U.S. dollar that ultimately supported the rising prices of yellow metal on Tuesday.

The U.S. Dollar Index that gauges the greenback's value against the basket of six major currencies also fell to the three-week lowest level at 91.78 and supported the upward trend in gold prices. The greenback's weakness was also associated with the increasing concerns that the unprecedented levels of fiscal stimulus and pent-up demand will lead to higher inflation. This ultimately can force the Federal Reserve to tighten its monetary policies more quickly than earlier expected. Fed officials are committed to supporting the economic recovery until the job figures improve and deny that they see any bump in inflation as temporary. Still, a hefty CPI jump would raise the pressure, especially after a sharp rise in producer prices.

The price pressures are increasing with the rising import and commodity prices and the ISM manufacturing and services prices are both at the highest level since 2008. Furthermore, the U.S. consumer price figures also showed a surge in inflation by the highest in more than eight and half years in March that set off the expectations of the short-lived spell of higher inflation and raised the demand for bullion that is also used as an inflation hedge.

At 15:00 GMT, NFIB Small Business Index remained flat with the forecasted 98.2 that did not affect U.S. dollar prices. At 17:30 GMT, the Consumer Price Index (CPI) for March raised to 0.6% against the expected 0.5% and supported the U.S. dollar, and capped further upside in gold prices. In March, the Core CPI also surged to 0.3% against the estimated 0.2%, supported the U.S. dollar, and limited the rise in yellow metal prices.

Gold prices gained support on the latest news that the Johnson & Johnson vaccine got banned temporarily because of rare blood clotting. Several U.S. health officials suggested stopping or delay the use of the J&J coronavirus vaccine after reports of irregular blood clotting. The U.S., South Africa, and the European Union stopped the Johnson & Johnson vaccine rollout. The case was similar to that of the AstraZeneca vaccine that suggests not to use further due to blood clotting side effects. This news also supported the safe-haven yellow metal prices on Tuesday.

Gold Intraday Technical Level

Support Resistance

1730.36 1756.51

1713.78 1766.08

1704.21 1782.66

Pivot Point: 1739.93

Gold - XAU/USD - Technical Outlook 

On the technical side, the XAU/USD is trading with a bullish bias at 1,747, facing immediate resistance at 1,749 levels. On the 4-hour chart, gold has formed a symmetrical triangle pattern, and the violation of this candle is likely to extend the buying trend until the 1,758 resistance area. Today, the 1,739 is working as an intraday pivot point level, and it may offer vital support to gold prices. The series of 20 and 50 periods EMA also supports a buying trend as these are extending support precisely at the pivot point area of 1,739. Gold may find hard time violating the 1,739 support level, but the next support will prevail around 1,723 level once it does. Bullish bias dominates over 1,739 levels today, along with resistance levels at 1,758 and 1,766 levels. All the best!