Gold Violates Upward Trendline at 1,819 – Brace for a Sell Trade

During Tuesday’s Asian trading session, the yellow metal price failed to extend its previous day’s upward momentum and dropped back to the $1,818 level as easing coronavirus fears and rising vaccine hopes, as well as escalating chatter over the European Central Bank (ECB) tapering, underpinned a risk-on mood. This was seen as one of the key factors that kept the gold prices lower. 

Moreover, the U.S. traders’ return from holiday and easing concerns over the monetary policy adjustments favor the positive mood. It should be noted that Australia, New Zealand, and Japan noticed a new reduction in the COVID-19 numbers. In the meantime, the optimism over the talks surrounding booster shots and faster vaccinations also played a major role in supporting the market trading sentiment.

In addition, the broad-based U.S. dollar’s recent strength put some extra burden on GOLD as the price of gold is inversely related to the price of the U.S. dollar. At this time, the yellow metal price is trading at 1,818.95 and consolidating in the range between 1,818.68 and 1,827.33

Easing Covid Numbers & Receding Chatters Over Monetary Policy Tightening

The market sentiment maintained its previous day’s positive performance and remained well bid on the day. This was witnessed after the 10-year U.S. Treasury yields started the week positively, up 2.2 basis points (bps) to 1.343%. While the S&P 500 Futures posted 0.10% intraday gains of around 4,538, maintaining the recent grind to the north of the all-time high. However, the reason could be attributed to easing concerns about monetary policy changes and recent dip in coronavirus numbers. 

On the other hand, the hopes of faster rollout of COVID-19 jabs and U.S. traders returning from the holiday favor the market trading mood. It should be noted that Australia, New Zealand, and Japan reported a reduction in the COVID-19 numbers and introduced plans on how they could overcome the pandemic, especially in Canberra. The third day of easing cases in Australia, around 1,470 at the latest, joins Tokyo’s first below 1,000 daily cases in seven weeks to portray the improving conditions. However, the U.K.’s rise in cases contrasts with the easing death tolls, confusing traders. 

Stronger Dollar Drive Sellers in Gold

Despite the upbeat market trading mood, the broad-based U.S. dollar managed to stop its early-day bearish bias and drew some bids amid higher U.S. benchmark Treasury yields. The U.S. 10-year Treasury yields started the week positively, up 2.2 basis points (bps) to 1.343%. Investors are keeping their eyes on Australia’s central bank policy decisions and other central bank decisions that are due throughout the week. 

Looking forward, the market traders will keep their eyes on the U.S. and Canadian markets, which were off the previous day, and hence the return of the key Western traders will be watched closely for near-term direction. Furthermore, the full-day reaction to Friday’s U.S. Nonfarm Payrolls (NFP) and the latest COVID-19 updates, not to forget vaccine optimism, will also be crucial to watch. 

Gold Technical Outlook

On Tuesday, the precious metal GOLD began to move out of its broad trading range of 1,833 – 1,823. The market appears to be dominated by a bearish bias. The intraday pivot point level of 1,824 remains the immediate resistance level for gold. The precious metal gold price will be exposed to the 1,828 and 1,833 levels if this resistance level is broken bullishly.

Daily Support and Resistance

1810.39 S3

1817.38 S2 

1820.34 S1

Pivot Point 1824.37

1827.33 R1

1831.35 R2

1838.34 R3

Gold’s immediate support lies between 1,816 and 1,810 on the support side. While the Stochastic also points to a gold-selling tendency. If the 1,810 level is broken further, the metal will be exposed to the 1,801 level. 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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