Technical Analysis

GOLD Analysis – October 20, 2021

By LonghornFX Technical Analysis
Oct 20, 20213 min

XAU/USD Surge Above 1,772 Pivot Point

Gold prices fell on Tuesday after climbing more than 1% the day before, as increasing U.S. Treasury yields and optimistic news from American corporations weighed on its safe-haven appeal. Gold's spot price was up 0.3 percent to $1,769.94 per ounce. It had risen as much as 1.2 percent earlier in the session due to a weaker dollar, making precious metals more affordable to foreign investors. December gold futures in the United States closed 0.3 percent higher at $1,770.5.

Tuesday's gains on Wall Street were bolstered by positive reports from Johnson & Johnson and insurer Travelers. Gold's non-yielding attraction has been diminished as benchmark 10-year Treasury yields in the United States reached their highest level since early June, at 1.6302 percent.

Market participants are widely expecting the Fed to begin trimming its asset purchases eventually, given that the earnings season has been good thus far, and recent data has shown a solid uptick in U.S. consumer prices. As investors awaited statements from Federal Reserve officials this week, which could provide insight into the possibilities of tightening monetary policy, gold held steady.

The price of gold has recently varied as markets analyze the prospect of earlier-than-expected tightening to curb inflationary pressures. Following Governor Christopher Waller's statement Tuesday that the Fed should begin tapering its bond-buying program next month. However, interest-rate increases are likely "still some time off," upcoming speeches, as well as dialogues by officials including Randal Quarles, Mary Daly, and Chair Jerome Powell, could provide more hints.

Traders in the United States are now pricing in a full rate hike at the Fed's September meeting held next year. However, excluding the European Central Bank, many of the world's central banks are projected to proceed faster.

GOLD Intraday Technical Level

Support Resistance

1756.81 1787.01

1744.08 1807.48

1724.61 1819.21

Pivot Point: 1776.28

GOLD - Technical Outlook

On Wednesday, gold’s technical outlook continues to be the same as the market’s focus remains on Bitcoin and Bitcoin ETF. Thus, gold continues to trade bullish and is now priced at $1,775 per ounce. The technical side of gold is suggesting a strong bullish bias. The RSI has surged above 50 and it’s suggesting a bullish trend in gold on a 4-hour timeframe.

The 1,772 level, on the other hand, is gold's immediate support. If the 1,772 level is broken, a sell-off might ensue till the 1,765 and 1,760 levels are reached. On the upside, gold's following resistance levels remain at 1,777 and 1,787, respectively.

We might anticipate a bearish correction in bullion on Wednesday, particularly below the 1,782 mark. Gold bullish bias dominates above 1,772 and vice versa. All the best!


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