GOLD Analysis – December 15, 2021

Gold’s Daily Price Analysis

Gold prices ended the day at $1772.90, having reached a top of $1789.80 and a low of $1766.45. After climbing for the previous two days, gold reversed course and fell on Tuesday. Soaring yields and a stronger dollar hit on the precious metal as investors awaited signals from the Federal Reserve about how quickly it might be able to phase out economic support measures at its upcoming monetary policy meeting.

At this week's monetary policy meeting, Fed Chairman Jerome Powell's recent remarks have already been emphasised. The rate-setting committee will almost certainly declare that it would expedite the pace of lowering the bond-buying programme in order to complete it by March rather than June. This will assist the Fed in raising interest rates from around zero, where they have been since March 2020, when the coronavirus outbreak created a brief but severe recession.

Rising inflationary pressures have held the US dollar strong recently, but the latest CPI report showed that the Fed might not contemplate raising interest rates sooner because consumer prices did not rise sufficiently to warrant a rate hike. Inflation is expected to peak in March of next year, after the Fed has concluded its bond taper, making it difficult for officials to express a more patient course.

Meanwhile, inflationary pressures may have been exacerbated by the lingering supply chain concerns and rising labour shortages caused by the impact of the Omicron variation, which was causing less impact on the economy's growth than prior variants. On Tuesday, gold remained under pressure due to a strong US currency and increasing US Treasury yields on the benchmark 10-year note. As a result, the DXY continued to rise, reaching a high of 96.59 for the day. While the US Treasury yield regained some of its recent losses and reached 1.47 percent, non-interest-bearing gold fell.

The NFIB Small Business Index stayed steady at 16:00 GMT, with expectations of 98.4. At 18:30 GMT, the November PPI had risen to 0.8 percent from the expected 0.5 percent, bolstering the US dollar. The Core PPI increased to 0.7 percent in November, up from 0.4 percent projected, strengthening the US dollar. The stronger-than-expected macroeconomic statistics from the United States bolstered the greenback, dragging gold prices lower on Tuesday.

GOLD Intraday Technical Level

Support Resistance

1762.96 1786.31

1753.03 1799.73

1739.61 1809.66

Pivot Point: 1776.38

GOLD - Technical Outlook

Gold is trading at $1,770 per ounce on Wednesday, breaking through the upward trendline at $1,775 per ounce. Gold is likely to find immediate support on the 2-hour period at the 1,766 double bottom level. On the downside, this violation may expose the gold price to the 1,760 level. The RSI and Stoch RSI indicate a strong selling tendency, so it's worth taking a look for a bearish entry.

Alternatively, a break above 1,775 can initiate an uptrend till the next resistance level of 1,782 or 1,789. For more price action, keep an eye on the US FOMC and the Federal Funds Rate. All the best!