Gold – XAU/USD Analysis – Aug 19, 2021

Unemployment Claims in Highlights

After hitting a high of $1795.65 as well as a low of $1778.90, gold prices settled at $1789.25. On Wednesday, gold prices were steady for the second day in a row as minutes from the Federal Reserve's July meeting revealed that most members were leaning toward slowing of bond-buying this year, citing progress toward inflation and employment targets.

The US Dollar Index (DXY), which gauges the dollar's value against a basket of six major currencies, rose to 93.26 on Wednesday, putting pressure on precious metals for the day. In contrast, Treasury yields in the United States fell to 1.25 percent on Wednesday after climbing to 1.30 percent earlier in the day.

Despite an intensified spreading of the Delta variant and higher coronavirus infections and ongoing talks about the central bank slowing asset purchases, the Federal Reserve's July meeting minutes demonstrated that officials still maintained optimism in the economy's recovery.

According to the minutes, many participants stated that financial and economic conditions would likely necessitate a reduction in the coming months, while others stated that asset purchases should not be tapered until the early months of next year. On the other side, other members thought that cutting back on asset purchases this year may be a good idea.

According to Jerome Powell, head of the Federal Reserve, the Fed's removal of stimulus will require significant progress in the labor market. The Fed meeting was dominated by discussions over the timing for slowing asset purchases, which has pushed gold prices lower. Due to its successful vaccine implementations, better-than-expected development, and recovery in some economic sectors, as well as the likelihood of rising interest rates, gold has been under pressure this year.

On the statistics front, the Building Permits in July soared to 1.64 million against a forecast of 1.61 million, supporting the US dollar and adding to the fall in gold prices at 17:30 GMT. Housing Starts in July fell to 1.53 million, vs. an expectation of 1.60 million, weighing on the US dollar and capping a decline in gold prices on Wednesday.

Furthermore, the spreading of the Delta strain of the coronavirus around the world and concerns about a fading economic recovery kept gold prices supported. Because of the conflicting market sentiment, the precious metal has been consolidating, and XAU/USD has been flat for the trading session.

Gold Intraday Technical Level

Support Resistance

1780.21 1796.96

1771.18 1804.68

1763.46 1813.71

Pivot Point: 1787.93

Gold - XAU/USD - Technical Outlook

On Thursday, the precious metal gold is trading with a bearish bias below the pivot point support level of 1,786. Gold’s immediate resistance stays at the 1,795 level and a bullish crossover above this level could expose its prices to 1,802 and 1,809 levels at first. Continuation of the additional buying trend could also expose gold prices to the 1,832 level.

Speaking of the support levels, gold’s immediate support prevails at 1,777 and 1,769 levels. The Stochastic indicator is holding in a sell zone. However, the 1,786 level is very crucial today as the bearish bias remains strong below this level.

The major focus will be on the U.S. unemployment claims that are due to come out during the New York session. It may help drive further price action in the XAU/USD prices.

All the best!