Gold Slips Below Key Support at $1,782, Who’s up for a Sell?
Arslan Butt•Friday, December 10, 2021•2 min read
- The US Treasury Yield on the benchmark 10-year note broke its 3-day bullish momentum, dropping to 1.47% on Thursday
- The declining movement in the market suggests that most traders believe that inflation figures will ease this month
- The precious metal is facing a major hurdle with the 50-day exponential moving average at 1,780
Gold prices closed at $1,776.70, after placing a high of $1,788.40, and a low of $1,773.30. Gold reversed its course on Thursday, after rising for the previous two sessions. The declining prices of precious metals could be attributed to the rising strength of the US dollar, as investors are taking positions ahead of the US inflation data this week.
The US Treasury Yield, on the benchmark 10-year note, broke its 3-day bullish momentum, dropping to 1.47% on Thursday. On the other hand, the US Dollar Index, which measures the greenback’s value against a basket of six major currencies, recovered all of its previous daily losses, moving to the 96.34 level.Traders are waiting for the release of the US Consumer Price Index report, as it will directly influence the Federal Reserve’s monetary strategy. Analysts believe that higher inflation numbers will positively impact gold and could take its prices towards $1,800, while a low inflation figure could have a negative impact on
gold.
The declining movement of the market suggests that most traders believe that inflation figures will ease this month. However, one must not forget about the other factors driving the prices of gold, like fears of the Omicron variant and the potential geopolitical tensions.
Uncertainties prevail in the market, because of the Omicron variant, the increased tensions between Russia and the US, the diplomatic boycott of the Beijing Olympics by Western nations and the US sanctions on Iran. These lingering issues gave the precious metal some support, due to its safe-haven status, which kept the decline in gold limited for the day.
On the data front, at 18:30 GMT, the Unemployment Claims from last week came in, reflecting a decline to 184K, against the forecast of 218K, which supported the US dollar. At 20:00 GMT, the Final Wholesale Inventories came in, showing a rise to 2.3%, against the projected 2.2%, which weighed on the US dollar. The favorable jobless claims figure from last week added to the strength of the US dollar and helped increase the downward momentum in gold.
The market focus has shifted to the upcoming release of the US CPI report on Friday, which will provide clues about the imminent release of the Federal Reserve’s monetary policy. Ahead of this report, the cautious behavior of investors also kept the gold market down on Thursday.
Gold price forecast – Upward trendline breakout at $1,782
The XAU/USD is trading at $1,777, having slipped below the support level of $1,782. On the 2-hour timeframe, the precious metal has violated the upward trendline support at 1,782. The closing of candles below this level opens up further room for selling until the next support level of 1,774.
Daily Technical levels
Support Resistance
1,770.54 1,785.64
1,764.37 1,794.57
1,755.44 1,800.74
Pivot Point: 1,779.47The precious metal is facing a major hurdle with the 50-day exponential
moving average at 1,780. A spike in selling pressure below the 1,780 level could drive a downswing until 1,774 or 1,770. Alternatively, a break below 1,774 would open up additional room for selling until the 1,762 level. Good luck!
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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