Technical Analysis

Gold – XAU/USD Analysis – Aug 16, 2021

By LonghornFX Technical Analysis
Aug 16, 20214 min

Upward Trendline to Supprot Gold

During Monday's Asian trading session, the precious metal price failed to stop its previous week's downward performance and remained sour at the week's start as the mounting coronavirus woes, geopolitical tussles in the Middle East, and U.S. stimulus deadlock weighs on the market's trading sentiment. Therefore, the downbeat market mood boosted the safe-haven U.S. dollar and became one of the key factors that kept the gold price under pressure due to its inverse relationship with the dollar.

Earlier, the yellow-metal price took some modest advantage of a drop in the U.S. dollar on Friday after a fall in U.S. consumer confidence, which boosted demand for the safe-haven metal. The survey showed that U.S. consumer sentiment fell sharply to its lowest level in a decade in early August. In the same line, the downbeat statistics from China put a further burden on the market's trading sentiment.

On the other hand, the Taliban's pursuit of power in Afghanistan and the US-Iran, as well as the Sino-American tussles, put some additional burden on the market's trading mood. Therefore, the downbeat market mood helps the safe-haven gold price to cap its losses. The gold price is trading at 1,773.58 and consolidating in the range between 1,773.07-1,782.65.

The market's trading sentiment failed to stop its previous week's negative performance and remained sour on the day as the coronavirus woes, geopolitical tussles in the Middle East, and the U.S. stimulus deadlock kept weighing on the market's trading mood. In addition to this, the downbeat key economic data from the U.S. and China raised doubts over the global economic recovery, which also played a major role in undermining the market trading mood.

As a result, the risk barometers like the U.S. 10-year Treasury yields & S&P 500 Futures remain pressured, extending Friday's downbeat performance on the day. This was witnessed after the U.S. bond coupon dropped three basis points (bps) to 1.268%, following the heaviest drop since July 06, the previous day. At the same time, the key U.S. stock futures gauge was also showcasing sour risk appetite and declined for the first time in five days, down 0.25% at 4,452 at the latest. However, the reason could be tied to the latest jump in the virus figures and the Taliban's takeover of Afghanistan.

Looking forward, the market traders will keep their eyes on the virus concerns, which are expected to keep weighing on the global supply market. Meanwhile, the headlines over the Sino-US tussle and the Taliban-Afghanistan matter will also be essential to watch. In addition to this, investors also await the Fed's next move on asset tapering and interest rate hikes. Fed Chairman Jerome Powell is set to speak at a virtual town hall meeting with educators and students on Tuesday.

Gold Intraday Technical Level

Support Resistance

1799.46 1781.21

1778.78 1782.28

1777.71 1782.96

Pivot Point: 1780.53

Gold - XAU/USD - Technical Outlook

On Monday, the precious metal was trading with a slightly bearish bias at the 1,773 level. Gold slipped lower after testing a strong resistance level of 1,782 level. On the 4-hourly timeframe, the metal has completed a 50% Fibonacci retracement at 1,757 level. A bullish crossover at the 1,750 level exposes the gold price towards the 61.8% Fibonacci correction level of 1,776. The closing of candles below this 50% level will suggest the chances of a bearish reversal in gold.

Gold’s immediate support stays at the 1,765 level and a breakout below this level exposes the metal towards the next support level of 1,762. On the resistance side, 1,782 is working as a major resistance today. Whereas, a bullish breakout of the 1,782 level could expose gold prices towards the 1,792 level. The MACD is holding above 0, exhibiting a bullish bias among investors. All the best!


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