Gold slips to $1,791 – Weaker US Current Account in Play
Arslan Butt•Wednesday, December 22, 2021•2 min read
- The deficit in the third quarter was 3.7 percent of current dollar GDP, which was up from 3.5 percent in the second quarter
- On the 2-hourly timeframe, the XAU/USD is trading with a slightly bearish bias, facing immediate resistance at the 1,791 level
- The dollar index (DXY) recovered some of its overnight losses, but traded marginally lower, making bullion more affordable for foreign traders
Gold prices have surged as the US dollar has slipped, and the threats to global economic development posed by an increase in cases of the Omicron Covid varian have bolstered the precious metal’s safe-haven appeal. During the Asian session, gold was up by 0.4 percent, at $1,796.10 per ounce, while gold futures were up by 0.1 percent, at $1,796.80.
Gold Rate Live
While a weaker US dollar has boosted
gold prices, the markets are still hesitant to send spot prices considerably higher, knowing that Treasury rates could potentially spike with US Federal Reserve rate hikes anticipated next year. However, if inflation expectations continue to be persistently elevated and nominal yields remain constrained, the precious metal may attract new offers in 2022.The dollar index (DXY) recovered some of its overnight losses, but traded marginally lower, making bullion more affordable for foreign traders. Bullion is sometimes regarded as a hedge against large increases in consumer prices, although interest rate increases may reduce inflationary pressures, while simultaneously diminishing the appeal of non-yielding gold.
European markets recovered after a selloff the previous day, but concerns about the Omicron variant of the coronavirus lingered, despite tougher controls in Europe and abroad, that threaten to affect the global economy ahead of the New Year.
Weaker US current account underpins XAU/USD
According to statistics released by the US Bureau of Economic Analysis today, the US current-account deficit, which represents the merged balances on trade in goods and services, as well as income flows between US residents and residents of other nations, increased by $16.5 billion, or 8.3 percent, to $214.8 billion in the third quarter of 2021 (BEA). The second-quarter deficit was revised to $198.3 billion.
The deficit in the third quarter was 3.7 percent of current dollar GDP, which was up from 3.5 percent in the second quarter. The $16.5 billion increase in the current-account deficit in the third quarter reflected a lower surplus on services and larger deficits on secondary income and products, which was partially offset by a larger surplus on primary income.
Gold (XAU/USD) – A technical outlook; brace for a sell trade
On the 2-hourly timeframe, the XAU/USD is trading with a slightly bearish bias, facing immediate resistance at the 1,791 level. The closing of candles below this level supports a selling bias in gold. The yellow metal is on the verge of completing a 50% Fibonacci correction at 1,784. At the same time, the resistance continues to hold at around 1,791 (marking a 38.2% Fibo). The
RSI and Stoch RSI suggest a selling bias; therefore, let’s consider looking for a sell trade under 1,791 and vice versa. 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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