Gold – XAU/USD Analysis – Aug 18, 2021

FOMC Meeting Minutes In Focus

After hitting a high of $1797.35 and then a low of $1782.25, gold prices settled at $1788.05. Following a five-day rise, gold prices remained unchanged during Tuesday's session, owing to mixed market emotions.

Due to increased uncertainty following the sudden collapse of the Afghan government, the rising safe-haven appeal continued to support safe-haven yellow metal prices. Whereas the strength of the U.S. dollar on Tuesday managed to keep the precious metal under stress, resulting in remaining gold flat during the day.

On Tuesday, the U.S. Dollar Index, which measures the value of the dollar against a basket of 6 major currencies, soared to 93.17, pushing the greenback higher and weighing on gold prices. Meanwhile, U.S. Treasury Yields on the benchmark 10-year note reversed their bearish trend that went green for the day, rising to 1.285 percent, adding to the strength of the U.S. dollar, putting further downward pressure on gold prices.

The TIC Long-Term Purchases from June stayed unchanged at 01:00 GMT, with estimates of 110.9B. The Core Retail Sales for July fell to -0.4% below expectations of 0.2 percent at 17:30 GMT, weighing on the U.S. dollar and supporting gold prices.

In July, retail sales also fell by -1.1 percent against expectations of -0.2 percent, putting pressure on the U.S. dollar and capping losses in the yellow metal. At 18:15 GMT, Industrial Production in July increased by 0.9 percent, beating expectations of 0.5 percent, bolstering the U.S. currency and putting pressure on gold. The Capacity Utilization Rate also soared to 76.1 percent, up from 75.7 percent expected, supporting the U.S. dollar and limiting gold's upward momentum. Business Inventories for June remained unchanged at 19:00 GMT, despite forecasts of 0.8 percent. The NAHB Housing Market Index plunged to 75 in August from an expected 80, putting pressure on the U.S. dollar and helping gold maintain its market position.

Federal Reserve (Fed) Chairman Jerome Powell spoke on Tuesday that it's unclear whether the increased epidemic of the Delta coronavirus will significantly impact the economy. People and businesses are altering their lifestyles in response to the coronavirus, according to Powell, because it is expected to linger and continue to harm the economy.

As per the Centers for Disease Control & Prevention, more than 315 million vaccine doses have been provided, with more than 72 percent of U.S. adults receiving only one shot and 61.8 percent receiving full vaccination. Although more people got vaccinated, Powell noted that the rate of vaccination was modest.

He further added that the United States was ahead of many similar countries in terms of vaccinating its population a few months ago, but that the country has since fallen behind, resulting in an outbreak of the Delta strain of coronavirus in some areas of the country. Powell made no mention of the Fed's intention to taper asset purchases; however, investors can learn more about the Fed's decision in the minutes of the July Fomc meeting, which will be released on Wednesday.

Gold Intraday Technical Level

Support Resistance

1781.09 1796.19

1774.12 1804.32

1765.99 1811.29

Pivot Point: 1789.22

Gold - XAU/USD - Technical Outlook

On Wednesday, the precious metal gold is trading with a slightly bullish bias above the pivot point support level of 1,787. Gold’s immediate resistance stays at the 1,795 level and a bullish crossover above this level could expose its prices towards 1,802 and 1,809 levels at first.

Continuation of the additional buying trend could also expose gold prices to the 1,832 level. Speaking of the support levels, gold’s immediate support prevails at 1,779 and 1,764 levels. The Stochastic indicator is holding in a buy zone. However, the 1,787 level is very crucial today as bullish bias dominates this level and sellers will take charge upon a bearish breakout below this level.

The major focus will be on the U.S. FOMC meeting minutes that are due to come out during the New York session. It may help drive further price action in the XAU/USD prices.

All the best!