Gold – XAU/USD Analysis – June 15, 2021

U.S. Core Retail Sales in Focus!

Gold was closed at $1868.60 after placing a high of $1875.85 and a low of $1846.20. Gold extended its decline on Monday and reached its lowest level since May 17 amid the strength in the U.S. dollar. Yellow metal-faced heavy pressure and dropped to its lowest in a month as the speculations around the market started to get a pace that the Federal Reserve might present some timetable for tapering the asset purchases in its upcoming policy meeting scheduled later this week.

The U.S. Dollar Index that measures the greenback value against the basket of six major currencies remained flat near 90.50 handles. In contrast, the U.S. Treasury Yields on benchmark 10-year note staged a heavy recovery and reached above 1.50%, ultimately added strength to the U.S. dollar. The Federal Reserve officials have repeatedly said that the recent price hike will not last long and was temporary. They were encouraged by the difference between prompted demand from the reopening of the economy and supply chain lags. Chairman Jerome Powell is also expected to favor monetary measures and keep the monetary policies accommodative until 2023.

Speculation of tapering talks in upcoming policy meetings kept the U.S. dollar higher and gold metal under pressure on Monday. However, many analysts were still not expecting the central bank to start discussing scaling back its asset purchasing program until late August, when the annual conference in Jackso Hole, Wyoming, is scheduled. The coronavirus pandemic prompted central banks worldwide to introduce quantitative easing last year and cut interest rates. The U.S. Federal Reserve also followed the trend and started $80 billion in Treasury bond purchases and $40 billion in mortgage bond purchases. Fed also reduced its interest rates near zero at 0.25%, and it has been more than a year that the rates have been this low as the United States fighting with the pandemic.

Market participants are hopeful that the rising price pressure and inflation figures will force Federal Reserve to start talking about scaling back from easing measures to support the economy. If any hint about tapering or interest rate hike would be seen in the upcoming Fed policy meeting, then the U.S. dollar will see a massive spike in its value that could drive yellow metal further lower and vice versa.

According to Johns Hopkins University, the U.S. reached another milestone, as the death toll due to coronavirus approached 600,000 on Monday. The COVID-19 pandemic has taken more lives in the United States than in any other country in the world. However, the governments around the U.S. have started easing the social distancing rules and relaxing the mask requirement. Businesses have also fully reopened due to a steady decline in coronavirus cases and sustained progress in the vaccination campaign. This also helped the U.S. dollar gather strength and kept precious metal below the $1,900 level.

Gold Intraday Technical Level

Support Resistance

1851.25 1880.90

1833.90 1893.20

1821.60 1910.55

Pivot Point: 1863.55

Gold - XAU/USD - Technical Outlook

The precious metal gold is trading at a 1,867 level, exhibiting a bullish correction. On the 4 hour timeframe, gold has completed 38.2% Fibonacci correction level at 1,866 and 1,873 levels. The support continues to hold around 1,858 on the lower side, which marks a 23.6% Fibonacci retracement level. The MACD is holding in a selling zone, supporting strong bearish bias, along with the 50 periods EMA is extending resistance at 1,881 level. On Tuesday, the investor’s focus stays on the U.S. Retail Sales and Core Retail Sales data as these indicators typically drive price action in gold and the U.S. dollar. All the best!