GOLD Analysis – December 31, 2021

Gold’s Daily Price Analysis

Gold prices gained in thin trade on Thursday, reversing previous losses as US Treasury yields fell from one-month highs, mitigating the effects of a strong dollar. By 1347 EDT (1847 GMT), spot gold was up 0.5 percent at $1,813.16 per ounce, while US gold futures were up 0.5 percent at $1,814.10. "We're in a very low-volume holiday trading period. I believe gold is at a comfortable level just above or below $1,800, "said Phillip Streible, chief market strategist at Chicago-based Blue Line Futures. With volumes projected to increase through next week, gold prices could find more of a direction, according to Streible.

Benchmark With no strong catalysts to drive market direction and many traders away before the New Year's break, 10-year US Treasury rates fell from one-month highs. This decreased the opportunity cost of storing bullion, which does not pay interest. Gold prices are down roughly 5% this year, on course for their worst drop since 2015, as economies recover from the pandemic's impact, cutting demand for safe-haven bullion.

Prices reached a one-month peak on Tuesday before falling to a one-week low the following day. Over the last two days, the back and forth saw has less to do with any fundamental catalyst and more to do with the fragile market, which amplifies volatility. The Labor Department said that new claims for US unemployment benefits started falling in the week leading up to Christmas, and benefits rolls fell to their lowest level of the coronavirus pandemic era the week before, data that showed no impact on employment from the rapidly spreading Omicron variant.

Initial jobless claims fell to a seasonally adjusted 198,000 for the week ending Dec. 25 from a revised 206,000 the previous week. Early this month, claims fell to a level not seen since 1969.

Reuters polled economists, who predicted 208,000 applications for the most recent week. Jobless claims have dropped from a high of 6.149 million in early April of 2020. The latest data reveal that Omicron, the newest and most contagious COVID-19 form, has yet to stymie a tight job market or impede a US economy that appears to be on course to close the year at a brisk growth rate. While the original claims data was skewed due to so-called seasonal adjustment factors, the non-seasonally adjusted figures - which were nearly 60,000 higher - showed essentially no week-over-week change. Limiting bullion's gains, US stocks rose on increased risk appetite as a decline in weekly unemployment claims allayed concerns about the economic impact of a widespread rise in COVID-19 infections in the US. Spot silver jumped 0.8 percent to $22.98 per ounce, while platinum fell 0.6 percent to $961.94, and palladium rose 0.1 percent to $1,984.31.

GOLD Intraday Technical Level

Support Resistance

1800.84 1822.74

1787.57 1831.37

1778.94 1844.64

Pivot Point: 1809.47

GOLD - Technical Outlook

On Friday, gold was trading bullish at 1,818, surging towards the next resistance levels of 1,822 and 1,830. The intra-day pivot point extends the support at 1,809, and the bullish bias remains solid above this. In the 4-hour timeframe, the formation of the "three white soldiers" pattern indicates the chances of an uptrend continuation. Therefore, on Friday, gold prices are exposed to the 1,822 or 1,830 resistance zone.

Gold’s immediate support stays at the 1,809 level on the bearish side, and a break below this level exposes the metal towards the 1,801 level. Further, the next support remains at the 1,788 level on the lower side. I wish you a very happy new year. All the best!