Gold – XAU/USD Analysis – June 25, 2021

UoM Consumer Sentiment!

Gold prices were closed at $1775.25 after placing a high of $1778.40 and a low of $1772.90. Gold came under fresh pressure on Thursday after the United States President Joe Biden and a bipartisan group of senators seized a deal on an infrastructure plan. The U.S. Dollar Index that measures the greenback value against the basket of six major currencies remained firm onboard despite poor-than-expected macroeconomic data from the economic docket. The DXY reached 92 levels at 91.91 level amid the recent agreement between the U.S. President and a bipartisan group and kept gold under pressure.

On Thursday, a bipartisan deal on infrastructure emerged in the U.S. Senate and was accepted by U.S. President Joe Biden and a bipartisan group. They reached an agreement on a $1.2 trillion infrastructure plan which was a rare breakthrough as Washington was deeply divided and was facing a complicated path to passage in Congress. Biden excitedly announced that a group of senators, including five Democrats and five Republican officials, have come together and agreed on an infrastructure agreement that is expected to create millions of jobs for Americans. The agreement includes traditional infrastructure spending on roads and bridges and new-transport-related items such as a national network of electric vehicle chargers. After this announcement, the U.S. dollar gathered strength in the hopes of economic growth associated with economic development. The strong U.S. dollar then added pressure on yellow metal's prices and dragged them downwards.

At 17:30 GMT, the Final GDP for the quarter remained flat, with the expectations at 6.4% on the data front. The Unemployment Claims from last week soared to 411K against the expected 382K and weighed on the U.S. dollar that capped further losses in gold. The Core Durable Goods Orders declined to 0.3% against the expected 0.8% and weighed on the U.S. dollar and limited the decline in gold prices. The Durable Goods Orders also fell to 2.3% against the forecasted 2.9% and weighed on the U.S. dollar and limited the loss in gold. The Goods Trade Balance remained unchanged at -88.1B. The Prelim Wholesale Inventories rose to 1.1% against the projected 0.8% and weighed on the U.S. dollar that kept gold supportive. At 17:36 GMT, the Final GDP Price Index for the quarter remained flat with the forecasts of 4.3%.

Meanwhile, the Atlanta Federal Reserve President Raphael Bostic said that a spell of high inflation in the United States could last as long as nine months; however, the central bank should still avoid declaring victory too soon in the battle to regain 7.5M jobs lost during the pandemic. Bostic added that the recent jump in the prices was temporary, but it will go a little longer than the expectations of the Fed.

On the other hand, the New York Federal Reserve Bank President John Williams said that the U.S. economy was still far from maximum employment on Thursday, and it was not the time to change interest rates. He added that once the recovery was completed and the economy reached a good place, the lower interest rates would be set to lift back to normal levels. These comments from Fed officials added some pressure on the U.S. dollar and kept losses in gold checked for the day.

Gold Intraday Technical Level

Support Resistance

1769.30 1784.80

1763.35 1794.35

1753.80 1800.30

Pivot Point: 1778.85

Gold - XAU/USD - Technical Outlook

On Friday, the precious metal gold is trading at a 1,776 level, trading between a tight trading range of 1,796 – 1,765 levels. Gold fails to violate as the GDP figure didn't show any surprise and came out precisely as analysts forecasted. A few days ago, gold completed 61.8% Fibonacci retracement level, and this level is still intact despite the release of high impact events like GDP. On the daily timeframe, the Fibonacci indicator offers resistance at 1,795 and 1,822, which are extended by 50% and 38.2% Fibonacci retracement levels. The leading indicator, such as MACD, is still holding below 0, supporting a selling bias in gold. Furthermore, the 50 periods EMA is extending resistance at 1,821 level, and below this, the selling pressure remains strong. All the best!