GOLD Analysis – December 21, 2021

Gold’s Daily Price Analysis

Gold prices ended the day at $1792.20, with a high of $1804.60 and a low of $1789.05. After climbing for the previous two sessions, gold reversed course on Monday and fell. Despite a weakened US dollar, gold remained under pressure, owing mostly to higher US Treasury yields. The US Dollar Index, which measures the value of the dollar against a basket of six major currencies, dipped to 96.55 on Monday, while the US Treasury Yield on the benchmark 10-year note rose to 1.42 percent, making non-yielding metal more expensive for holders.

Concerns about the impact of the Omicron version and tougher COVID-19 regulations also weighed on global equities. The precious metal, on the other hand, went down as safe-haven inflows halted. Analysts concluded that gold's allure was fading as the holiday approached, and that traders were no longer totally engaged.

Fed Governor Christopher Waller hinted at a probable rate hike when the bond cutting ends in March 2022. This news increased risk appetite in the market and weighed on gold, as a rate hike by the US Federal Reserve would raise the opportunity cost of holding non-interest-bearing gold.

On the statistics front, the CB Leading Index rose to 1.1 percent at 20:00 GMT, exceeding the anticipated 0.9 percent, bolstering the US dollar and contributing to the precious metal's decline on Monday. On Monday, China's Foreign Minister, Wang Yi, detailed the country's diplomatic goals for the coming year. He stated that while Beijing supports mutually beneficial cooperation and healthy competition with the US, it is not afraid of confrontation.

According to Yi, China's position was constant and unambiguous. Cooperation should be reciprocal; dialogue should be equal. Competition should be beneficial rather than detrimental. He also stated that China is not frightened of conflict and will fight to the last end. While the phase-one trade agreement between the world's two largest economies was set to expire at the end of the year, China's comments provided conflicting perspectives on US-China relations. Both parties are involved in trade negotiations at various levels and on a regular basis.

According to China, the US supply side was interfering with China's ability to reach purchasing targets. Furthermore, in order to minimize the rising number of illnesses caused by the Omicron variety, a growing number of countries are decreasing the wait time for COVID-19 vaccination boosters from six months to as little as three. Evidence suggested that the Omicron variety was spreading quicker than its predecessor, Delta, prompting this reaction.

Some scientists, however, believe that administering booster shots too soon may jeopardize the amount of long-term vaccine protection. Many studies have shown that the first two vaccinations were insufficient to prevent infection from the Omicron variety, but a booster shot may be beneficial. Countries have also begun to give booster shots to their citizens in order to prevent the rapid spread of variations, despite the fact that booster doses must be administered after six months. This news could have lowered gold prices by raising risk appetite.

GOLD Intraday Technical Level

Support Resistance

1785.96 1801.51

1779.73 1810.83

1770.41 1817.06

Pivot Point: 1795.28

GOLD - Technical Outlook

On Tuesday, the yellow metal gold is gaining support at the 1,791 level. On the 4-hour timeframe, gold has closed a Doji candle supporting weakness in the selling bias. Therefore, the bounce-off is likely in gold prices today. On the resistance side, gold’s major hurdle stays at 1,795 (pivot point mark), and above this, prices will be exposed towards the next resistance level of 1,800 and 1,810.

Gold’s immediate support stays at 1,790 levels. At the same time, a break below the 1,790 barriers might expose the gold price down to 1,784 or 1,778 level. The RSI and Stoch are signaling a downtrend in gold. All the best!