2. Points To Be Discussed Today:
• Gold Prices & Technical Chart
• Gold – A Technical Outlook – XAU/USD
Supported Over $1,855
• Gold Technical Overview
• Gold Fundamental Overview
•
3. Gold Prices
• Gold prices closed at $1,867.85, after setting a
high of $1,871.35, and a low of $1,848.10.
• Gold surged on Friday and extended its gains
for the 7th consecutive session, amid
increased demand for bullion as an inflation
hedge, triggered by a surge in US consumer
prices.
4. Gold Has Gained As Much As $110
• Since November 3, gold has gained as much as
$110, bolstered by deepening fears of inflation
and reassurances from key central banks that
interest rates will remain low for the time being.
• Furthermore, the US dollar was low on Friday,
which ultimately put upward pressure on gold
prices. The US Dollar Index, which measures the
value of the greenback against a basket of six
major currencies, dropped to the 95.00 level on
Friday, from a daily high of 95.26.
6. Gold Gains Are Somewhat Limited
• Gold was clearly responding to higher
inflationary pressure.
• However, the gains in the precious metal were
somewhat limited, as market participants
were of the view that tighter Fed policies
would control inflation, and that the economy
was robust enough to withstand higher rates.
7. The Opportunity Cost Of Holding Gold
• On the interest rate front, the Federal Reserve
has kept rate hikes off the table for now.
• The Chairman of the Federal Reserve, Jerome
Powell, omitted to give any concrete timeline
as to when the Fed will begin to raise rates.
• The reduced stimulus and interest rate hikes
tend to push up government bond yields and
raise the opportunity cost of holding gold,
which pays no interest.
8. Gains In Gold Prices
• On the data front, at 20:00 GMT, the JOLTS job
openings surged to 10.44 million, against the
forecast of 10.02 million, which supported the US
dollar and put the brakes on any further gains in
gold prices.
• The Prelim UoM Consumer Sentiment dropped to
66.8, from the anticipated 72.5, which weighed
on the greenback and supported the upward
momentum in the yellow metal.
• The Prelim UoM Inflation Expectations surged to
4.9% in November, from the previous 4.8%.
9. The Fixed-income Group
• Meanwhile, New York Federal Reserve Bank
President John Williams said on Friday that
higher inflation was not affecting all
households equally, with people on fixed
incomes taking a bigger hit.
• He said that the fixed-income group was less
protected against surprisingly high inflation.
10. Gold – A Technical Outlook –
XAU/USD Supported Over $1,855
• Gold is trading at the 1,859 level, facing strong
resistance at the 1,865 level.
• On the 4-hour timeframe, XAU/USD is trading
with a bullish bias, having violated the upward
channel, which is now suggesting a strong
bullish trend in gold.
11. Gold – A Technical Outlook –
XAU/USD Supported Over $1,855 - I
• However, the precious metal has now entered
the overbought zone and may exhibit a
bearish correction.
• On the lower side, immediate support for the
XAU/USD prevails at 1,850, which is extended
by a 38.2.% Fibonacci retracement level.
• A further breakout at 1,850 could lead the
gold prices towards levels of 1,845 and 1,840.
14. The Resistance Level
• The resistance level remains at the 1,865 level,
and violation of this level would expose the
metal to the 1,869 level.
• The RSI and stochastic are in an overbought
zone, and the closing of candles below the
1,865 level would open the metal up to the
1,850 level.
• Let’s consider taking a sell trade below 1,865,
and buy above the same.
15. Gold Technical Overview
• Nothing seems to have changed on the short-
term technical front, as gold price remains on
track for the further upside on a sustained
break above the June 16 highs of $1,869.
• The next significant resistance is seen at the
June 14 tops of $1,878, followed by the
$1,900 psychological level.
16. Gold Technical Overview - I
• The 14-day Relative Strength Index (RSI) peeped
briefly in the overbought zone but has eased
slightly thereafter, suggesting that a fresh
upswing could be in the making.
• On the downside, the $1,850 demand area will
get tested initially, below which Friday’s low of
$1,845 will be the next stop for gold sellers. The
previous critical resistance now support at $1,834
will hold the key for gold bulls.
17. Gold Fundamental Overview
• Starting out a fresh week, gold price renewed
multi-month tops but lacked follow-through
upside momentum, now trading modestly
lower below $1,860.
• Gold price ignores the extended weakness in
the US dollar, as stabilizing Chinese economy
offers some comfort to the market, reeling in
the country’s indebted property sector woes.
18. Gold Fundamental Overview - I
• Investors also weigh in the Fed’s dilemma
amid sapping consumers’ confidence and
surging inflation concerns, as they refrain from
placing any fresh bids on gold price.
• A lack of first-tier US macro news could also
keep gold’s trading momentum in check.
• Traders also bide time ahead of Tuesday’s US
Retail Sales release, which will provide fresh
cues on the Fed’s rate hike timing.
