Gold on a Bullish Run – 50 EMA to Extend Resistance at $1,766
Arslan Butt • 2 min read
GOLD closed at $1,751.70, after reaching a high of $1,758.00, and a low of $1,740.20. Gold reversed its course on Friday and recovered a small portion of its previous loss, on the back of the softer dollar. After falling by more than 1% in the previous session, gold found some support near the $1,740 level, helped by the subdued dollar prices, which have been dragging the prices of gold to the downside lately.
On Friday, the US Dollar Index posted gains and remained green for the day, reaching the 93.4 level, which limited the upward trend in gold. On the other hand, on the benchmark 10-year note, US Treasury Yields reached their highest level since June 27, coming in at 1.46%, which also put a damper on the day’s gains in gold.
Federal Reserve Chairman Jerome Powell has said that the tapering process could be concluded around the middle of next year, as long as the recovery remains on track. Powell also suggested that the Fed might lift interest rates earlier than expected. These positive comments by the Fed chair have been keeping dollar prices higher, which has been putting continuous pressure on the yellow metal.
On the data front, at 19:00 GMT, new home sales for August increased to 740K compared to the expected 712K, supporting the US dollar and limiting further gains in the prices of the yellow metal. Meanwhile, the statement by the Global COVID-19 Summit was released on Friday. It revealed that the Summit promised to reach the targets set by the WHO and its partners, which means that 40% of the population of all countries will be vaccinated by the end of 2021 and 70% by the middle of next year.
The Summit underscored the need for action on all fronts, as vaccines alone cannot defeat the pandemic. Accelerated testing sequences and access to oxygen, PPE and more were needed. The Summit also discussed the steps needed to prevent and better prepare for the next pandemic.
The coronavirus pandemic has killed more than 4.7 million people since it broke out in December 2019. The US is considered the worst-hit economy, with more than 600,000 deaths, followed by Brazil, India, Mexico and Russia.
According to the World Health Organization, the number of new coronavirus cases continued to fall last week, with 3.6 million new cases reported globally, which was down from 4 million new infections the previous week. The UN Health agencies also revealed a 7% decline in the number of weekly deaths caused by the pandemic. These developments also kept the gold prices under pressure on Friday.
Gold – XAU/USD – Technical Outlook – All Eyes on $1,750
Gold is trading with a bearish bias at the 1,756 level, and facing immediate resistance at 1,758. An intraday pivot point level is extending immediate support at 1,749. On the 4-hourly timeframe, the precious metal is trading with a slight selling bias, holding below the 50-day SMA (simple moving average) at 1,766.
Daily Technical Levels
Pivot Point: 1,750.15
On the lower side, the immediate support for gold prevails at 1,741 and 1,727. Failure to break above the 1,766 level could trigger a sell-off in GOLD. Thus, the major focus will be on the 1,766 level. On the higher side, significant resistance for gold remains at 1,775 and 1,782. Let’s consider selling below the 1,766 level and vice versa.