Gold – XAU/USD Analysis – Aug 25, 2021

Durable Goods Orders m/m Ahead

After hitting a top of $1812.05 and a low of $1802.65, gold prices settled at $1803.75 per ounce. Gold rose to its highest level since August 5th during the early trading hours of Tuesday, despite falling dollar prices. However, after surrendering all of its earlier gains, the yellow metal failed to maintain its bullish trend and turned red for the day.

The U.S. Dollar Index, which measures the dollar's value against a basket of six major currencies, fell on Tuesday, extending its loss for the third straight day to 92.81, putting pressure on the greenback. The U.S. Treasury Yield on the benchmark 10-year note, on the other hand, jumped to 1.299 percent on Tuesday, pushing the greenback higher for the day and keeping yellow metal under pressure.

The yellow metal's range-bound movement on Tuesday could be related to investors' growing concerns that the rising coronavirus infections caused by the Delta variety would cause the U.S. Federal Reserve to delay announcing its plans to withdraw its economic support at the forthcoming Jackson Hole symposium.

The growing Delta variation spread heightened concerns about economic growth, forcing investors to expect the U.S. Federal Reserve to postpone tapering, and these expectations left the yellow metal under stress on Tuesday. Due to its reputation as a hedge versus inflation risks and currency weakness. On the other hand, gold prices have been stuck between conflicting messages from Fed officials about the possibility of reducing economic support.

Meanwhile, gold prices stayed above $1800 on Tuesday, indicating that the market was still concerned about the increasing Delta variation spread and supporting the yellow metal as a safe-haven asset.

On the statistics front, the Richmond Manufacturing Index for August fell to 9 from an anticipated 25 at 18:59 GMT, weighing on the U.S. dollar and capping additional losses in gold prices. At 19:00 GMT, New Home Sales in July jumped to 708K, beating expectations of 698K, bolstering the U.S. dollar and adding to the slide in precious metals.

Investors are growing concerned that the Federal Reserve will not unveil its plans for cutting economic support at the Jackson Hole symposium on Friday, based on August data indicating weak signals of improvement in the U.S. economy. The increased spread of the coronavirus because of the Delta variety and its impact on society could be the cause of the poorer-than-expected macroeconomic data in the United States.

Gold Intraday Technical Level

Support Resistance

1800.25 1809.65

1796.75 1815.55

1790.85 1819.05

Pivot Point: 1806.15

Gold - XAU/USD - Technical Outlook

Gold is trading with a bearish bias at the 1,796 level after testing the support level at the 1,793 level. The 4-hour timeframe has violated the pivot point support level of 1,796 level, which exposes the gold prices towards the next support level of 1,793 level. On the downside, the breakout of the 50% Fibonacci retracement level can extend further selling bias until the 64.8% Fibonacci retracement level of 1,789.

On the higher side, a 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. The RSI value is still in the sell zone. That means the breakout of 1,793 could drive more selling in gold. The major focus will remain on the core durable goods orders.

All the best!