Gold – XAU/USD Analysis – Aug 23, 2021

Unemployment Claims in Highlights

Gold prices reached a high of $1791.0 as well as a low of $1780.0 before closing at $1784.00. The yellow metal lost ground for the fourth consecutive session on Friday, posting a loss for the day due to the strength of the U.S. dollar.

During an early trading session on Friday, the U.S. Dollar Index soared to a nine-and-a-half-month high of 93.73. However, after encountering selling pressure in late trading hours, the DXY began to fall and ended the day in the red, closing at 93.50. The 10-year Treasury Yield, on the other hand, increased to 1.267 percent, bolstering the U.S. currency and putting pressure on gold.

Because no macroeconomic data from the United States was scheduled to be released on Friday, the yellow metal maintained the market trend and the movements of the U.S. dollar, remaining in a state of consolidation. Concerns about increased coronavirus cases, which might disrupt the global economy, continued to bolster the yellow metal. However, as investors sought the U.S. dollar as a safe haven instead of gold, the price rises were modest.

The near-term picture for gold is mixed, with safe-haven inflows supporting the metal, but the Federal Reserve's hints about tapering leaving gold under pressure. If the Fed keeps emphasizing tapering, it will put downward pressure on gold prices, as the currency has already strengthened and Treasury yields have risen due to the taper talks.

Aside from the taper discussions, the U.S. dollar was also vital due to safe-haven demand. The dollar index hit a nine-and-a-half-month high on Friday, limiting gold's momentum as metal became more costly for holders of other currencies.

During the ongoing spread of the Delta version of the coronavirus, the average daily fatalities in the United States approached 1000, and the average weekly cases exceeded one million, according to data obtained by Johns Hopkins University. This week, the global case count surpassed 211.6 million, and the death toll surpassed 4.4 million.

Concerns about the economy have resurfaced as the Delta variant's distribution has expanded. The fatal variation compelled Australia and New Zealand to rethink their coronavirus-eradication policies. Australia's Prime Minister even stated that his country's return to zero incidents was exceedingly unlikely.

Meanwhile, Indonesia's lockdown measures were extended, and the daily infection count decreased, while the German minister stated that no more lockdowns would be implemented. With 684 daily deaths, Iran has set a new record. France has announced intentions to increase student vaccination rates, South Korea has purchased more than 7 million Moderna pills, and Thailand has promised greater spending to combat the coronavirus. All of these developments in the fight against the coronavirus maintained the safe-haven appeal strong in the market, and investors favored the U.S. dollar to the precious metal because of its safe-haven status; thus, gold stayed depressed.

Furthermore, the focus was switched to the Federal Reserve's annual meeting this week in Jackson Hole, Wyoming, which would likely offer more insight into the monetary policy and timeframe, putting downward pressure on gold prices on Friday.

Gold Intraday Technical Level

Support Resistance

1777.96 1783.16

1775.78 1786.18

1772.76 1788.36

Pivot Point: 1780.98

Gold - XAU/USD - Technical Outlook

Gold is trading with a slight bearish bias at the 1,786 level after testing the resistance level at the 1,786 level. On the 4 hour timeframe, gold tested and closed a Doji candle below a downward trendline resistance of 1,788 level. Gold's immediate support prevails at 1,782 level, which is extended by a pivot point level. A bearish breakout below this level could expose the XAU/USD pair towards the next support area of 1,776. Furthermore, the resistance holds at around 1,792 and 1,797 levels.

On the 4 hour timeframe, the precious metal has closed a symmetrical triangle pattern that suggests a wide trading range of 1,792-1,776 level. Therefore, the breakout of this range will further determine the next trends in gold. All the best!