Technical Analysis

GOLD Analysis – September 10, 2021

By LonghornFX Technical Analysis
Sep 10, 20215 min

Pivot Point Level to Support Gold at $1,794

The yellow metal price managed to stop its previous-day downward rally and drew some fresh bids around above the $1,800 level. The yellow metal was set to end the week on a bearish track. The dollar was gaining positive traction, and uncertainty over the U.S. Federal Reserve's timeline to start asset tapering was growing. Although the losses in bullion prices were brief, the U.S. dollar began to lose its positive energy and fell on the day. The reason could be attributed to the weaker Treasury yields, which dropped after the U.S. government saw strong demand for 30-year bonds.

Furthermore, the market's upbeat mood put some additional burden on the safe-haven U.S. dollar. Thus, the price of gold is inversely tied to the price of the U.S. dollar, a weaker U.S. currency that tends to support gold prices. Apart from this, the uncertainty surrounding the economic recovery, which was being challenged by the Delta covid variant, also boosted the yellow-metal safe-have appeal.

In addition to this, the buying bias around the yellow-metal prices was also sponsored by the headlines concerning the U.S. Federal Reserve (Fed) officials' push for tapering. As of writing, the precious metal price is trading at 1,801.15 and consolidating in the range between 1,792.63 and 1,803.95. The market's trading sentiment succeeded in stopping its previous-day downward performance and turned well bid on the day. The 10-year Treasury yield in the United States has recovered to 1.30% after falling by more than four basis points (bps) the previous day. Similarly, the S&P 500 Futures have ignored Wall Street benchmarks, gaining 0.08% intraday to 4,495 at the most recent close.

The U.S. President Joe Biden revealed aspects of his battle plan to defeat the pandemic during an early Friday news conference in Asia. With statements like "we can and will turn the tide on COVID-19," his main focus was on faster vaccinations and the push for masks. So, these motivational remarks have a positive impact on the market's trading sentiment.

Besides this, the cautious optimism from U.S. President Joe Biden, during his 6-pronged strategy speech, preceded the first time in seven months, talks between Biden and his Chinese counterpart, Xi Jinping, improved the market's trading sentiment.

As per the latest details, the U.S. side refrains from being too optimistic and terms talks as 'a a broad, strategic discussion'. While Chinese media said, "Xi and Biden had a frank discussion on US-China relations." In addition to this, Biden's push for vaccinations/masks and the U.K.'s approval for booster shots of the covid vaccines add further to the market's slightly positive mood. Therefore, the prevalent buying bias surrounding the market's trading sentiment was a key factor that kept the U.S. dollar lower.

At the USD front, the broad-based U.S. dollar failed to extend its early-day winning streak and dropped modestly on the day as the market risk-on mood tends to undermine the safe-haven U.S. dollar. Meanwhile, the declines were further bolstered as Treasury yields dipped after the U.S. government saw solid demand for a sale of 30-year bonds. The U.S. dollar dropped 0.20% daily after the U.S. 10-year Treasury yields fell 4.3 basis points to revisit the sub-1.30% area, around 1.297% by the end of the North American session. Because the price of gold is inversely tied to the price of the U.S. dollar, the pessimistic mood around the U.S. dollar was considered a crucial factor in keeping the gold price higher.

Looking forward, the global markets will likely remain quiet ahead of the weekend amid a light calendar. The U.S. Producer Price Index (PPI) data for August, expected to be 0.6% MoM against 1.0% prior, will be key to watch for fresh direction.

GOLD Intraday Technical Level

Support Resistance

1782.94 1804.24

1772.37 1814.97

1761.64 1825.54

Pivot Point: 1793.67

GOLD - Technical Outlook

The precious metal gold is trading with a bullish bias, holding above a pivot point trading level of 1,794. Gold, on the other hand, is expected to find immediate support near 1,792. The breakout at the 1,792 level is likely to extend a selling trend until the next support level of 1,784, and below this, the next support will prevail around the 1,775 level.

The pair's immediate resistance stays at the 1,804 level. In the event of a bullish breakout, gold prices will be exposed to the 1,800 level, with the next resistance located around the 1,811 level. In the 4-hour time frame, the 50-period exponential moving average is likely to extend resistance around the 1,811 level. The closing of candles above the pivot point level of 1,792 suggests a bullish bias in the precious metal gold. Lastly, the RSI indicates a bullish bias in gold. Thus, gold's bullish bias remains strong above the 1,794 level and vice versa. All the best!


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