Technical Analysis

Gold – XAU/USD Analysis – Aug 26, 2021

By LonghornFX Technical Analysis
Aug 26, 20215 min

Prelim GDP & Jackson Hole Symposium in Focus

Gold prices closed at $1793.25 on Aug 25, after hitting a high of $1804.75 and a low of $1784.30. Gold fell for the second day in a row, closing below $1800, amid the same market sentiment. Investors were waiting for clues on the Federal Reserve's monetary tapering timeline at the Jackson Hole symposium.

Aside from that, investors were taking profits at about this stage after significant gains, which could be driving bullion prices lower for Wednesday's trading session. Furthermore, the US dollar made a slight rebound on Wednesday, despite prices ending the day in the red. The greenback remained on the rise for the majority of the day, owing to better-than-expected macroeconomic data.

On the data front, the Core Durable Goods Orders for July soared to 0.7 percent against the anticipated 0.5 percent, supporting the dollar and adding to the loss of precious metals at 17:30 GMT. The Durable Goods Orders rose to -0.1% in July, beating expectations of -0.3%, bolstering the US dollar and putting further bearish pressure on gold prices.

The Durable Goods Orders rose to -0.1% in July, beating expectations of -0.3%, bolstering the US dollar and putting further bearish pressure on gold prices.

Upon rising to 93.12 throughout early trading hours, the US Dollar Index, which determines the dollar's value against a bundle of six major currencies, fell for the third straight session on Wednesday, reaching 92.82. The 10-year Treasury yield, on the other hand, jumped towards its 10-day high of 1.352 percent on Wednesday, bolstering the US dollar and putting more downward pressure on gold prices.

The Jackson Hole symposium, the primary driver of this week's market sentiment, could be blamed for the mixed market sentiment. People were expecting the US Federal Reserve to begin tapering until the end of the year, but macroeconomic data released throughout the month suggested otherwise. The mixed situations increased market uncertainty, which favored gold, and the current risk-off market sentiment pressures on gold, causing the precious metal to suffer throughout the week.

The same was true of the US dollar, which rose to its highest level in nine months due to high expectations that the Fed would announce tapering at the symposium. However, the profits were lost when the country's economic data showed a slow recovery slowdown, despite the Delta variant's rising spread. The dollar began to fall ahead of the symposium, owing to dwindling expectations for Fed tapering announcements.

The Fed chairperson, Jerome Powell, will deliver a speech at the Fed's symposium on Friday this week, streamed live online due to the rise in virus cases. Many investors were still expecting a less dovish tone after hearing the speech, which is expected to offer more light on the timing for withdrawing stimulus.

Furthermore, concerns about the spread of the coronavirus slowing the economic recovery managed to keep the safe-haven appeal alive in the market, preventing further declines in gold prices. According to a report released on Wednesday by the UK's Office for National Statistics, coronavirus was the ninth leading cause of death in England in July. It rose from 26th most common cause of death in June, raising concerns about the economy's recovery. According to the weekly data, the UK had its highest weekly death average ever last week, with 652 deaths, an increase of 6.7 percent. According to the figures, it was the deadliest week in the UK as of March, when the nation recorded 800 deaths over the week.

On the other hand, the White House received a new evaluation report from the US intelligence agency on the roots of COVID-19 on Tuesday. According to the report, it is impossible to say whether the new coronavirus emerged naturally or due to a slab leak. The tentative conclusion was attributed to China by two senior US officials, who stated that detailed data from China was lacking.

Gold Intraday Technical Level

Support Resistance

1783.45 1803.90

1773.65 1814.55

1763.00 1824.35

Pivot Point: 1794.10

Gold - XAU/USD - Technical Outlook

On the technical front, the yellow metal trades with a bearish bias at the 1,787 level after getting rejected at the 1,791 resistance level. The 4-hour timeframe has violated the pivot point support level of 1,791level, which exposes the gold prices towards the next support level of 1,780 level. On the downside, a breakout of 1,780 support levels exposes the metal towards a 1,771 support zone.

On the higher side, a breakout of the 1,791 resistance level exposes the gold price towards the 1,801 level, and then the next resistance will prevail around the 1,808 level. The RSI value has entered the oversold zone, and therefore, the failure to break 1,780 support boost the odds for a bullish correction. Later today, the major focus will remain on the US GDP and Jackson Hole Symposium. All the best!


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