Technical Analysis

GOLD Analysis – January 11, 2022

By LonghornFX Technical Analysis
Jan 11, 20223 min

Gold’s Daily Price Analysis

Gold prices ended the day at $1801.10, having reached a top of $1802.50 and a low of $1789.45. Gold maintained its upward momentum on Monday, posting minor gains to recoup some of its prior losses. The sharp drop in the benchmark 10-year note US Treasury Yield on Monday could be related to surging gold prices. After climbing for five consecutive sessions, the US Treasury Yield fell on Monday to 1.75 percent, assisting gold to turn positive for the day. The US Dollar Index (DXY), which measures the value of the US dollar against a basket of six major currencies, remained solid for the day, staying around 95.99.

The benchmark US Treasury Yield touched a nearly 2-year high on Monday, as market players increasingly anticipate the US Federal Reserve to begin tightening policy with an interest rate hike as early as March. However, after reaching a two-year high, Treasury rates fell, most likely due to the price correction, and gold benefited from the dip.

Traders are now looking forward to publishing the CPI report on Wednesday, which will provide a better picture of the Fed's forthcoming rate hike decision. The country's significant rise in consumer prices and inflation levels has enhanced the necessity for a rate hike. Gold is regarded as a hedge against increasing inflation, but speculation of rate hikes has weighed on gold, as they tend to raise the opportunity cost of keeping non-yielding bullion. This is why gold's gains on Monday were pretty restricted. There wasn't much to look forward to on the statistics front from the United States. At 20:00 GMT, the Final Wholesale Inventories jumped to 1.4 percent vs. the predicted 1.2 percent, weighing on the US currency and ultimately pushing gold higher.

Another factor for the constant rise of gold prices could be Goldman Sachs' latest estimate of a rate hike. The investment bank changed its forecast that the Fed will raise interest rates four times this year and begin the process of shrinking its balance sheet as early as July. Previously, the bank forecasted three rate increases in 2022, in March, June, and September. However, the bank forecasts another rate hike in December, putting additional pressure on gold prices and capping its gain on Monday.

Furthermore, Pfizer's Chief Executive Officer, Albert Bourla, stated on Monday that Pfizer is operating on developing a vaccine that will be effective for the Omicron form and that the vaccine will be ready as soon as March. He stated that two vaccine doses plus a booster shot had previously offered reasonable protection against the serious health effects of Omicron; nevertheless, he was unsure if further vaccine specific to the Omicron version would be required in this scenario. These remarks by Bourla capped additional advances in gold by lowering risk-off market sentiment.

GOLD Intraday Technical Level

Support Resistance

1792.86 1805.91

1784.63 1819.73

1779.81 1818.96

Pivot Point: 1797.68

GOLD - Technical Outlook

Gold is trading with a strong bullish bias at $1,805, having rebounded above the $1,799 resistance level, which now is functioning as support for gold. Further to the upside, the next resistance level is at 1,815, and a break above this might push the gold price up to the 1,829 level. On the downside, support is holding around 1,799, and a breach below this level might expose the metal towards next support level of 1,782 and 1,776 level. All the best!


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