Gold Price Analysis: XAU/USD bears eyeing critical $1,820 support


  • XAU/USD resting at critical support while the dollar losses some commitments at critical resistance.
  • Can the greenback regain its footing in 2021?

Gold is trading at $1,839, a touch lower on the day, travelling between $1,834.18 and $1,864.11 despite the US dollar's slide in Europe and New York.

The Federal Reserve's decision which knocked risk appetite on Wednesday, but gold remains firmly in the recent trading range. 

Overall,  2021 had started out with large bearish bets on the dollar since and net short USD positions had edged higher in the week ending December 22. However, the spot market is telling a different story.

The US dollar has climbed in the FX space and risen some 1.9% measured by the DXY index, rallying from a low 89.20 to a high of 90.95 and attempting to break higher this week

Despite the market expectations that the Fed will maintain an ultra-accommodative monetary policy for an extended period of time, there is the underbelly of risk-off sentiment regarding the coronavirus vaccines.

''While the dollar may benefit from a brief spike in risk aversion potentially triggered by a new set of weak economic indicators – tough restrictions imposed by various countries to regain control over the coronavirus pandemic will cause more damage to economies – our house view is that the greenback will struggle to regain its footing in 2021,'' analysts at Rabobank explained.

Meanwhile, TD Securities said that their Global Macro PCA model suggests that gold prices are increasingly building in a discount relative to other markets related to the reflation theme.

''We argue that the yellow metal's discount is attributable to its trading regime. Indeed, gold is now trading more as a safe-haven asset rather than an inflation-hedge asset, which argues for lacklustre investment flows for the time being.''

The lower real interest teme had been a big driver of the precious metal's trajectory last year and the analysts argue that slumping Treasury yields, rather than rising inflation expectations, are likely to now fuel lower real rates.

However, the US dollar is intent on the upside US yields may only be getting started in their come back.

From a weekly perspective, the US 10 years have broken a key resistance this week and the DXY is not going down with a fight. 

The daily chart shows the DXY now at critical support:

In gold, 1820 is the major level to the downside below the current 50% mean reversion support:

XAU/USD

Overview
Today last price 1839.39
Today Daily Change -1.41
Today Daily Change % -0.08
Today daily open 1840.8
 
Trends
Daily SMA20 1870.71
Daily SMA50 1857.49
Daily SMA100 1880.14
Daily SMA200 1849.97
 
Levels
Previous Daily High 1853.2
Previous Daily Low 1831.36
Previous Weekly High 1875.2
Previous Weekly Low 1802.8
Previous Monthly High 1906.87
Previous Monthly Low 1775.52
Daily Fibonacci 38.2% 1839.7
Daily Fibonacci 61.8% 1844.86
Daily Pivot Point S1 1830.37
Daily Pivot Point S2 1819.95
Daily Pivot Point S3 1808.53
Daily Pivot Point R1 1852.21
Daily Pivot Point R2 1863.63
Daily Pivot Point R3 1874.05

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD languishes near multi-year lows below 0.6250 after dovish RBA Minutes

AUD/USD languishes near multi-year lows below 0.6250 after dovish RBA Minutes

AUD/USD remains depressed below 0.6250 early Tuesday after the December RBA Minutes reiterated that upside inflation risks had diminished, which reaffirms bets for a rate cut in early 2025. This, along with concerns about China's fragile economic recovery and US-China trade war, undermines the Aussie and weighs on the pair.

AUD/USD News
USD/JPY eases toward 157.00 after Japanese verbal intervention

USD/JPY eases toward 157.00 after Japanese verbal intervention

USD/JPY has come under renewed selling pressure, easing toward 157.00 after Japanese Finance Minister Kato's verbal intervention. The pair erased early gains, induced by the October BoJ meeting Minutes. However, the downside could be limited as the US Dollar hold the previous rebound. 

USD/JPY News
Gold: Buyers defends $2,600 ahead of holiday trading week

Gold: Buyers defends $2,600 ahead of holiday trading week

Gold price defends the $2,600 mark in the Asian session on Tuesday as buyers look to regain control. Markets face a relatively quiet trading session ahead of the holiday trading week. The US Richmond Fed Manufacturing Index for December will be watched out for later on Tuesday. 

Gold News
Solana dominates Bitcoin, Ethereum in price performance and trading volume: Glassnode

Solana dominates Bitcoin, Ethereum in price performance and trading volume: Glassnode

Solana is up 6% on Monday following a Glassnode report indicating that SOL has seen more capital increase than Bitcoin and Ethereum. Despite the large gains suggesting a relatively heated market, SOL could still stretch its growth before establishing a top for the cycle.

Read more
Bank of England stays on hold, but a dovish front is building

Bank of England stays on hold, but a dovish front is building

Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures