Gold Closes Tweezers Top Pattern – Ready to Sell Below 1,780?

• The US stock market fell immediately, while gold prices rose throughout the market, as both US Treasury yields and the US dollar fell. 
• The WHO forecasts raised concerns about the economic recovery, driving gold prices up, due to its safe-haven status.
• Gold is trading with a bullish bias at the $1,772 level, facing immediate resistance at the 1,782 level.

Gold prices ended the day at $1,778.20, having reached a high of $1,781.90, and a low of $1,753.00. Gold resumed its bullish trend on Friday, turning green for the day, after rising more than 1% in a single day.

The recently released US consumer sentiment, which fell sharply in August to its lowest level in a decade, could be attributed to rising gold prices. The lower-than-expected consumer sentiment eased investor concerns about early tapering of asset purchases by the Federal Reserve.

University of Michigan on the Consumer Sentiment Index

The unexpected reading on the consumer sentiment index by the University of Michigan, may cause the Fed to pause if it translates into a slowing of economic activity. The Federal Reserve is getting closer to deciding when to begin withdrawing the extraordinary stimulus it implemented to protect the economy from the coronavirus pandemic.

This caused the US stock market to fall immediately, while gold prices rose throughout the market, as US Treasury Yields and the US dollar fell. The US Dollar Index, which measures the value of the greenback against a basket of six major currencies, fell to 92.47 on Friday, while 10-year Treasury yields fell to 1.280 percent.

Economic Event Updates

At 17:30 GMT, import prices for July fell by 0.3 percent, versus the forecast of 0.6 percent, weighing on the US dollar and adding strength to the gold prices. At 19:00 GMT, August’s Prelim UoM Consumer Sentiment came in, showing a drop to 70.2, compared to the predicted 81.2, which put pressure on the US dollar and added to the gains in the yellow metal. Prelim UoM Inflation Expectations fell to 4.6 percent in August, which was down from 4.7 percent in the previous month.

After a brief recession in 2020, due to the coronavirus pandemic, the economy is expected to grow at the fastest rate in four decades this year. However, the recovery is showing signs of slowing down, as evidenced by the drop in consumer sentiment in August, which weighed on the US dollar and pushed gold prices higher.

Meanwhile, the World Health Organization has issued a warning that the number of coronavirus cases globally could reach 300 million by early next year, if the pandemic continues to spread at the current rate. The agency also urged world leaders to help poorer countries by providing more testing supplies, vaccines and treatments.

The WHO Forecasts Raised Concerns about Economic Recovery

According to WHO Director-General, Tedros Adhanom Ghebreyesus, the number of cases of the highly transmissible delta variant and the total number of unreported coronavirus cases, make the actual tally much higher than reported. The agency’s projection comes six months after the WHO reported 200 million coronavirus cases worldwide and 36.7 million coronavirus cases in the United States. This WHO forecast raised concerns about economic recovery and drove the price of gold up, due to its safe-haven status.

Gold-XAU/USD- Daily Technical Levels

Support               Resistance

1,799.46              1,781.21

1,778.78              1,782.28

1,77.71                1,782.96

Pivot Point:      1,780.53

Gold-XAU/USD- Technical Analysis- Sell Trades Below $1,780

Gold is trading with a bullish bias at the $1,772 level, facing immediate resistance at 1,782. On the higher side, the immediate resistance remains at 1,789, and a bullish breakout at this level could lead the gold price further upwards to 1,798. On the lower side, the support continues to hold around the pivot point level of 1,770.

On the 2-hour timeframe, gold has formed a tweezers top pattern that supports the odds of a bearish correction in gold. Besides this, the RSI is trying to come out of the overbought zone. Therefore, we should consider taking a selling position below the 1,780 level today, with an immediate target of 1,770 and 1,761. Good luck!

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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