Technical Analysis

Gold – XAU/USD Analysis – Aug 24, 2021

By LonghornFX Technical Analysis
Aug 24, 20213 min

Breaks Above 1796 Pivot Point

After a peak of $1809.05 and a low of $1778.05., gold prices settled at $1807.15. Following a five-day dip, gold prices reversed course on Monday, surging to their highest level since Aug 6. Most of the buying in gold was supported by the recent decline in the US dollar and the resurgent market for bullion as a safe haven.

Concerns that the Delta strain of the coronavirus could slow the rate of global economic recovery held gold's safe-haven appeal alive in the market and drove gold prices beyond $1800. On Tuesday, the US Dollar Index, which measures the dollar's value against a basket of six major currencies, dipped to 92.95, putting pressure on the greenback. While the 10-year Treasury yield fell to 1.252 percent on Tuesday, it added to the US dollar's strength and supported the growing price of gold.

Last week's drop in retail sales, consumer confidence, and market volatility showed a slowdown in the United States' economic recovery speed. Meanwhile, the Delta coronavirus was rapidly spreading over the world, increasing concerns about macroeconomic stability. The cumulative number of reported cases worldwide has crossed 212 million, including 4.4 million deaths due to coronavirus.

President Joe Biden of the United States advised unvaccinated people to get their immunizations on Monday, citing the rapid spread of a highly dangerous Delta coronavirus version. Meanwhile, because the Delta was interfering with the country's economic recovery, the US Food and Drug Administration authorized the vaccine from Pfizer and BioNTech. Pfizer's vaccine was the first to get complete approval from the US Food and Drug Administration, and it will now be marketed name Comirnaty.

On the basis of revised data from clinical trials involving more than 40,000 people, the FDA decided to approve the vaccine for people aged 16 completely and up. Pfizer's vaccine was deemed to be 91 percent efficient in preventing coronavirus by the volunteers.

On the data front, the Flash Manufacturing PMI fell to 61.2 in August, vs. an estimate of 62.4, weighing on the US dollar at 18:45 GMT. Gold prices rose even higher as a result of this. The Flash Services PMI fell to 55.2 in August vs. a forecast of 59.1, putting pressure on the US dollar. Gold was pushed above the $1800 barrier as a result of this. At 19:00 GMT, Existing Home Sales increased to 5.99 million, up from 5.82 million expected, bolstering the US dollar and capping further advances in the yellow metal.

Gold Intraday Technical Level

Support Resistance

1787.11 1818.11

1767.08 1829.08

1756.11 1849.11

Pivot Point: 1798.08

Gold - XAU/USD - Technical Outlook

Gold is trading with a bullish bias at the 1,802 level after testing the resistance level at the 1,806 level. On the 4 hour timeframe has violated the pivot point resistance level of 1,796 level, which exposes the gold prices towards the next resistance level of 1,806 level.

The breakout of the 1,806 resistance level could expose the gold price towards the 1,815 level, and then the next resistance will prevail around the 1,825 level. Conversely, support prevails at 1,796 and a breakout below this level may expose the XAU/USD pair to 1,785 and 1,776 levels. The RSI value is still in the sell zone. That means the breakout of 1,806 has the potential to drive additional buying in gold.

All the best!


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