XAU/USD Clings To Gains Near $1,800, Lacks Follow-Through

1. XAU/USD Clings To Gains Near
$1,800, Lacks Follow-Through

2. Points To Be Covered Today:
• Time For XAU/USD To Shine – DBS Bank
• Gold To Perform In Most Macro Scenarios
• Gold Will Serve Its Role
• XAU/USD To See Further Falls Towards $1774
– Commerzbank
• Gold Bearish Rejection From The Top
• Gold Technical & Fundamental Overview

3. Time For XAU/USD To Shine – DBS
Bank
• At current prices, gold is attractive to long-
term buyers looking to hedge their portfolio
against risks from dollar weakness, negative
interest rates, high inflation and exogenous
risk events.
• Economists at DBS Bank see the following four
scenarios as probable, and the overall pattern
is for gold price to rise in most scenarios.

4. Gold To Perform In Most Macro Scenarios
• “One scenario would be when the market
renews its focus on US inflation risks, amid an
improving labour market and supply-side
disruption.
• This could set the stage for a ‘risk-off’ event.
• This scenario played out in 2003 when gold
reacted strongly to inflation fears on the back
of strong oil price.”

5. Gold Will Serve Its Role
• “Another scenario could be escalating virus
cases as vaccine efficacy fades.
• This could lead to a downgrade in growth for
2022 and a delay in the quantitative easing
(QE) taper timeline, which will then be a
positive for gold.
• The US stock climb would probably come to a
halt, and gold will serve its role as a hedge
for volatility.”

6. The USD Index (DXY)
• “The inverse correlation with the USD Index
(DXY) has intensified in 3Q21.
• Nevertheless, with negative correlation at a
high, a reversal in the dollar’s strength could
see a strong reversal rally in gold.
• Our DEER FX model indicates that the dollar is
overvalued on a long-term basis.
• However, the dollar could stay firm into 1Q22,
depending on the US’s QE taper timeline.”

7. Goldilocks Scenario With Moderate
Growth
• “In a goldilocks scenario with moderate
growth and mild inflation, there will be no
rush for the Fed to hike interest rates, and
bond yields will likely stay at low levels.
• We believe gold will still be supported in this
environment as central banks around the
world continue to accumulate gold as a risk
diversifier.”

8. XAU/USD To See Further Falls
Towards $1774 – Commerzbank
• The 55-week moving average at 1833 has capped
the gold price rally.
• Karen Jones, Team Head FICC
Technical Analysis Research at Commerzbank, expects
the yellow metal to suffer further slippage.
• “Gold has rallied to and failed at the $1833/34
resistance. This is the location of the July high and the
55-week ma.
• Dips back from here are indicated to remain shallow
and should be contained ideally by $1774.

9. The 55-week Ma Has Provoked Initial
Failure
• “While above $1750, the 29th June low it will remain
neutral to positive.”
• “Key resistance is the mid-July high at $1834, a close
above here is needed to retest the $1856/57 4th June
low and the $1867 2020-2021 downtrend.”
• “Below $1750, support is found at $1679.80$/1677.83,
and is reinforced by the $1670 June 2020 low.”
• Below $1670 would target the 2018-2021 uptrend at
$1592.”
• “The downtrend at $1867 guards the $1916.91 May
high.”

10. XAU/USD To Hit $1871 On Erosion Of
August Highs At $1834
• Gold remains capped at its July/August highs
at $1832/34.
• Only above here would see a small base to
open the path towards the $1871 mark,
strategists at Credit Suisse report.
• Only below $1671 would mark an important
change of trend lower

11. Gold Strength Has Stalled
• “Gold strength has stalled at the July and August
highs at $1832/34.
• Only a break above here would be seen to
complete an in-range base to clear the way for a
deeper recovery to $1871, then $1917.”
• “Below $1775 is needed to ease the immediate
upward bias for a fall back to $1691.”
• “Only below $1671 though would mark a major
top to mark an important change of trend lower
with support then seen at $1620/15 initially, then
$1565/60.”

12. Gold Bearish Rejection From The Top
• Gold is currently moving down. I had a perfect
sell from the top which is running in profits.
• As the price is breaking below the MAs and
78.6 fibonacci we could see a support.
• If you see the daily chart, you might notice a
potential head and shoulders emerging pattern.
• Watch for a rejection at the blue level 1788.
• If the market doesn’t hold 1788 then get ready
for 1750.

13. Gold Bearish Rejection From The Top - I

14. Gold Analysis: Drops Below 1,800.00-I
• At mid-day on Tuesday, the price
for gold reached below the 1,800.00 level.
• During early Wednesday's trading, the rate
was fluctuating in the 1,795.00/1,800.00
range. It could be observed that round price
levels were impacting the metal.
• If the metal manages to pass the resistance of
the 1,800.00 level.

15. Gold Analysis: Drops Below 1,800.00
• A surge could find resistance in the 200-hour
simple moving average near 1,810.00 and the
55 and 100-hour simple moving averages near
1,815.00.
• Meanwhile, a decline below the 1,795.00 level
might look for support in round price levels.
• For example, throughout August the
1,785.00, 1,780.00 and 1,775.00 levels served
as support.

16. Gold Technical Overview

17. Gold Technical Overview - I
• While extending the pullback from the triple tops formed since mid-
July, gold prices dropped below the monthly support line, now
resistance, while also breaking the convergence of 100-day and 200-
day EMA.
• Having breached crucial EMAs and trend lines, XAU/USD remains
directed towards an ascending support line from August 16, near
$1,790.
• However, any further weakness won’t hesitate to challenge June’s low
around $1,750 whereas an extended fall past $1,750 could make the
commodity vulnerable to aim for the yearly low surrounding $1,676.
• On the contrary, the stated EMA confluence near $1,805 guards
immediate upside of the metal ahead of the support-turned-resistance
line close to $1,825.
• It should be noted that the gold buyers remain skeptical unless
witnessing sustained trading beyond the $1,832-34 horizontal
resistance area.

18. Gold Fundamental Overview
• Gold attracted some buying on Wednesday and was
seen hovering near daily tops, around the $1,800 mark
during the early European session.
• The uptick allowed the XAU/USD to recover a part of
the previous day's slump to one-and-half-week lows
and snap two consecutive days of the losing streak.
• The risk-off impulse in the financial markets – amid
worries about the fast-spreading Delta variant of the
coronavirus – turned out to be a key factor that
extended support to the safe-haven precious metal.

19. Gold Fundamental Overview - I
• Meanwhile, the anti-risk flow triggered a sharp pullback in
the US Treasury bond yields, which further benefitted the
non-yielding yellow metal.
• That said, expectations for an imminent Fed taper
announcement later this year might continue to act as a
tailwind for the US bond yields.
• This, along with a modest US dollar strength, should hold
traders from placing aggressive bullish bets around dollar-
denominated commodities, including gold.
• Hence, it will be prudent to wait for a strong follow-
through buying before confirming that the recent fall from
the $1,834 strong resistance zone has run its course.

20. XAU/USD Clings To Gains Near
$1,800, Lacks Follow-Through

21. Thanks for listening
XAU/USD Clings To Gains Near $1,800,
Lacks Follow-Through