• The US dollar index, which measures the value of the greenback against six major currencies, fell on Tuesday.
  • The increasing spread of the Delta variant increases doubts about economic growth.
  • On the upside, a breakout of the 1,806 barrier level could push gold prices towards the 1,815 figure.

Hi guys,

The precious metal, GOLD, closed at $ 1,803.75, after hitting a high of $ 1,812.05 and a low of $ 1,802.65. On Tuesday, in the early hours of trading, gold hit its highest level since August 5, amid a drop in the price of the US dollar. However, the yellow metal failed to hold its bullish trend and turned red for the day, after losing all of its initial gains. The US dollar index, which measures the value of the greenback against six major currencies, fell on Tuesday, extending its losses for the third session in a row and falling to 92.81. This weighed heavily on the greenback. In contrast, the yield of the US Treasury on the benchmark 10-year bond surged on Tuesday, reaching 1.299%. This pushed the greenback higher for the day and kept the yellow metal under pressure.

The move linked to the yellow metal’s fork on Tuesday could be attributed to growing concerns from investors who believe the growing number of coronavirus cases, due to the virulent Delta variant, could cause the US Federal Reserve to refrain from announcing its plans to reduce its economic support at the next Jackson Hole symposium. The continued spread of the Delta variant heightened doubts about economic growth and led investors to anticipate that the US Federal Reserve could delay the cut, and those hopes kept the yellow metal under pressure on Tuesday. Gold tends to rise due to stimulus spending, due to its status as a hedge against inflation risks and currency weakness. However, gold prices have been caught between mixed signals from Fed officials regarding dwindling economic support.

Meanwhile, precious metal prices remained above the $ 1,800 level on Tuesday, and the failure of gold to fall below that level showed the market was still concerned about the rapid spread. of the Delta variant, which supported the yellow metal as a safe haven.

Weaker Richmond manufacturing index weighs on dollar

On the data front, at 6:59 p.m. GMT, the Richmond manufacturing index for August entered, showing a drop to 9, from a forecast of 25. This weighed on the US dollar and caused further losses. in gold prices. At 19:00 GMT, new home sales for July were released, showing an increase to 708K, from the projected 698K, supporting the US dollar, which contributed to the further decline in precious metals.

Data for August showed signs of sluggish growth in the US economy, adding to growing investor concerns that the Fed may not announce plans to cut economic support at the Jackson Hole symposium, which is scheduled for Friday.

The reason behind poorer-than-expected US macroeconomic data could be the increasing spread of the coronavirus, due to the Delta variant, and its impact on society.

Gold Technical Analysis – Pivot Point Breakout

After testing the support level of 1793, gold trades with a bearish bias around 1796. The pivot point support mark of 1796 over the 4 hour period has been breached, exposing prices to gold at the next support level of 1,793.

Daily technical levels

Support resistance
1,800.25 1,809.65
1,796.75 1,815.55
1,790.85 1,819.05
Pivot Point: 1,806.15

On the downside, a break in the 50 percent Fibonacci retracement level could extend the sell trend even further, to the 64.8 percent Fibonacci retracement mark of 1789. On the upside, a breaking the barrier level of 1,806 could push the GOLD prices near the 1,815 mark, with the 1,825 level serving as the next resistance. The RSI is still in negative territory. As a result, a breakout of 1,793 could result in further gold sales. Orders for basic durable goods will continue to be the focus. Good luck!


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