Upward Trendline Supports Gold at $1,807 – Quick Trade Plan
The precious metal old prices were closed at $1814.45 after placing a high of $1835.85 and a low of $1809.50. Gold reached its highest since
Arslan Butt•Thursday, August 5, 2021•2 min read
Good morning, traders,
The
gold prices closed at $1,814.45, after placing a high of $1,835.85, and a low of $1,809.50. The precious metal reached its highest level since July 15 during the early trading hours, on the back of the declining US dollar. However, during the late American session, after the release of US macroeconomic data and the comments by a top Fed official, the greenback gathered strength and reversed its course, causing the yellow metal to lose all of its daily gains.
Federal Reserve Vice Chairman Remarks on Policy
The precious metal shed its early gains on Wednesday, after the Vice Chairman of the Federal Reserve said that the economic targets set by the central bank were likely to be achieved by the end of next year, and that interest rate increases would begin in 2023.
While Clarida remained reluctant to give any timetable for when the Fed might start reducing its asset purchases of $120 billion per month, in an effort to keep financial markets liquid in the wake of the coronavirus crisis, he also mentioned that Fed officials were discussing when they could pull back on those bond purchases.He elaborated further, saying that investors and traders would be given plenty of notice before any such decision was made, so they should not worry about it. This comment came in after growing concerns over the economic recovery peak that began in April 2020, and the rising inflation that took the prices even higher than the Fed’s target.
These comments by Richard Clarida added extra strength to the US dollar, pushing it higher, which ultimately weighed on the yellow metal prices.
ADP Non-Farm Employment Change Supports Gold
On the data front, at 17:15 GMT, the ADP Non-Farm Employment Change for July came in, showing a drop to 330K, against the expected 695K, which weighed on the greenback and reduced the losses in the GOLD prices. At 18:45 GMT, the Final Services PMI was released. It remained flat, in line with the expectations of 59.9.
At 19:00 GMT, the ISM Services PMI showed a surge to 64.1, against the forecast of 60.5, supporting the US dollar and dragging the XAU/USD even lower for the day.
The jobs data came in against the US dollar, falling short of the expectations; however, the non-manufacturing PMI data from the Institute for Supply Management offset the jobs data, pushing the greenback higher, as the reading reached its highest level in history.
The US Dollar Index, which gauges the greenback’s value against a basket of six major currencies, rose on Wednesday, reaching 92.31, after declining for the previous two consecutive sessions. The rise in the greenback could be attributed to the better-than-expected ISM Services PMI data and the Fed Vice Chairman’s positive comments. The surge in the prices of the greenback kept the precious metal under pressure for the day.
Gold -XAU/USD – Daily Technical levels
Support Resistance
1,803.41 1,830.66
1,792.38 1,846.88
1,776.16 1,857.91
Pivot Point: 1,819.63
Gold -XAU/USD – Technical Analysis – Ascending Trendline Supports at $1,807
GOLD is trading at 1,810, and gaining support over the 50 periods EMA level of 1,807. A bearish breakout at this level could extend the selling trend until the next support level of 1,793. At the same time, the resistance remains at 1,819. The downward trendline extends resistance at the 1,819/20 level; however, a breakout at this level could drive more buying until 1,833. The MACD and the
RSI are in a selling zone, supporting odds of a continuation of the selling trend. On Thursday, we should keep an eye on the 1,807 level, as above this, the bullish bias will continue to be solid.
Good luck!
Arslan Butt
Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)
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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