Gold – XAU/USD Analysis – June 14, 2021

Three Black Crows Pattern Driving Sell!

Gold prices were closed at $1879.60 after placing a high of $1906.20 and a low of $1876.10. On Friday, gold prices edged above $1900 during early trading hours on the back of a pullback in dollar and lower bond yields after the U.S. inflation data suggested that the rise in inflation was inadequate to change the easy monetary policy of the Federal Reserve. However, the yellow metal could not enjoy its movement above the 1,900 level and started to drop after the U.S. economic data came upfront. Later, the U.S. dollar gathered strength against its rival currencies and moved higher. The DXY turned green on Friday after the U.S. Treasury yields on the benchmark 10-year note pulled back from the 3-months lowest level and turned green after six days of losses.

The U.S. Dollar Index that measures the greenback value against the basket of six major currencies rose and reached the $90.60 level. The strong comeback in the U.S. dollar came in after the U.S. Treasury yields on Friday broke their bearish streak of 6 days and gave strength to the dollar that ultimately dragged gold prices downward. On the data front, at 19:00 GMT, the Prelim UoM Consumer Sentiment in June rose to 86.4 against the projected 84.1 and supported the U.S. dollar that added further loss in the yellow metal; the Prelim UoM Inflation Expectations remained flat at 4.0%.

As the world's largest economy rebounds strongly from the coronavirus pandemic, U.S. inflation has jumped to its highest rate since 2008. In May, the CPI surged to 5% at an annual rate, up from the previous 4.2%, and recorded the highest level since2008. As per the U.S. Bureau of Labor and Statistics, U.S. inflation had steadily climbed since the start of this year when it was at 1.4%.

In recent weeks, the U.S. Dollar Index has fluctuated as traders were unsure if the inflationary pressure could force the FED's Open Market Committee into an earlier tapering of the stimulus as the economy reopened after the pandemic. However, the repeated comments from Fed officials insisted that inflation would be transitory and calmed the concerns. Whereas, the market was also anticipating that Fed might be close to giving hints on the timing for decreasing its asset-purchase program.

On the other hand, on Friday, at G7 Summit, Beijing's top diplomat condemned the small circle diplomacy of Washington. At the same time, the U.S. administration of Je Biden also maintained a firm line against China. Meanwhile, they were also hoping to rally allies to counter Beijing's trade, human rights, and technology.

In response to this, China's top diplomat hit back against the claims by the U.S. administration and urged the U.S. to resolve its human rights violations, and warned them not to utilize the human rights issue as a pretext to interfere in the internal affairs of other countries arbitrarily. The rising tensions between both countries kept the safe-haven demand from the U.S. dollar high that weighed on the precious metal as both share a negative correlation.

Gold Intraday Technical Level

Support Resistance

1873.95 1878.45

1872.35 1881..35

1869.45 1882.95

Pivot Point: 1876.85

Gold - XAU/USD - Technical Outlook

On Monday, the yellow metal gold is trading with a strong bearish bias at 1,864, disrupting the symmetrical triangle pattern. The triangle pattern supported gold around 1,876 levels, and now the same level is working as resistance for gold. Gold's next support holds around 1,855 level on the lower side, and break out of this level exposes gold towards 1,843 level. On the higher side, gold's resistance stays at 1,876 level today. The bearish bias remains dominant today. All the best!