Technical Analysis

Gold – XAU/USD Analysis – July 21, 2021

By LonghornFX Technical Analysis
Jul 21, 20213 min

50 EMA Crossover


Gold was closed at $1809.45 after placing a high of $1825.80 and a low of $1805.35. Gold was steady throughout Tuesday’s trading session as gold tried to move upward in the first half of the day. However, in the second half of the day, with the strength of the U.S. dollar and reduced inflows into the safe-haven metal despite concerns over the mounting coronavirus cases globally, the precious metal reversed its momentum. It ended its day on a red note.

The U.S. Dollar Index that measures the greenback value against the basket of six major currencies rose for the 4th consecutive session and reached 93.17 level, which is the highest since March 28. The rise in the greenback value was due to increased demand for the U.S. dollar due to its safe-haven status.

Investors preferred the U.S. dollar over yellow metal while considering the safe-haven appeal and risk-off market mood in the market. It was because investors were of the view that concerns were not such alarming as they were at the time when vaccines were not available. Furthermore, the gold outlook was already disturbed due to the rising yields and stocks on the day.

The main indexes on Wall Street rose by almost more than 1% on Tuesday, including Dow Jones Industrial Average that fell on the previous day to a nine-month lowest level. The U.S. Treasury Yields on the 10-year note rose to 1.220 level after dropping to its lowest since the beginning of February.

At 17:30 GMT, the Building Permits for June dropped to 1.60M against the expected 1.69M and weighed on the U.S. dollar that further caped loss in the yellow metal. In June, the Housing Starts rose to 1.64M against the forecasted 1.59M and supported the U.S. dollar, and added further pressure on the precious metal.

On the coronavirus front, the U.S. health officials said that the contagious delta now accounts for more than 80% of new coronavirus cases in the country. Meanwhile, On Monday, Europe became the first region worldwide to cross 50 million coronavirus cases as the most contagious Delta variant accelerated a record increase in the daily new infections.

The Delta variant that is significantly more contagious than the original version of coronavirus has been detected in more than 100 countries and has become a dominant variant worldwide. These concerns kept the safe-haven appeal in the market alive and supported the U.S. dollar more than the yellow metal.

Gold Intraday Technical Level

Support Resistance

1796.80 1819.80

1784.40 1830.40

1773.80 1842.80

Pivot Point: 1807.40

Gold - XAU/USD - Technical Outlook

The yellow metal gold is trading with a bearish bias at 1,810 levels, having crossed below the 50 periods EMA line. This EMA line was extending support at the 1,814 level, and since gold prices are holding below this, it will work as a resistance.

On the downside, the precious metal gold is likely to find support at the 1,802 level that’s extended by an upward trendline. Above this, gold has a chance to bounce off until the 1,813 level. However, the bearish breakout of 1,802 support levels exposes gold prices towards the 1,796 level. In the absence of high-impact fundamentals, the market’s focus will remain on the technical levels of gold that we just discussed. All the best!


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