Weekly Market Analysis / 13 - 17 September 2021

Gold started the week in a relatively calm manner and continued to fluctuate in the previous week’s horizontal channel on Monday. Although the precious metal managed to rise above $1,800 on Tuesday, it came under strong bearish pressure in the second half of the week and fell to its lowest level in a month at $1,745 on Thursday. The XAU/USD pair struggled to stage a convincing rebound ahead of the weekend and closed the second straight week in the negative territory, losing nearly 2%.

  • Gold's technical outlook turned bearish following Thursday's sharp decline.

  • Next target on the downside for XAU/USD is located at $1,730.

  • FOMC will announce policy decisions and release updated Summary of Economic Projection.

What Happened Last Week

  1. On Tuesday, the data published by the US Bureau of Labor Statistics revealed that inflation in the US, as measured by the Consumer Price Index (CPI), edged lower to 5.3% on a yearly basis in August from 5.4% in July as expected.

  2. The Fed reported on Wednesday that Industrial Production in August expanded by 0.4%, falling short of the market expectation of 0.5%. On a positive note, the Federal Reserve Bank of New York’s Empire State Manufacturing Index improved sharply to 34.3 in September from 18.3 in August. Although these prints failed to trigger a significant market reaction, rising US Treasury bond yields provided a boost to the USD mid-week.

  3. On Thursday, the US Census Bureau announced that Retail Sales in the US increased by 0.7% in August, beating the market forecast for a contraction of 0.8% by a wide margin. Furthermore, the 3% upsurge witnessed in the 10-year US Treasury bond yield put additional weight on XAU/USD’s shoulders, causing the pair to lose than 2% on a daily basis.

  4. Finally, the University of Michigan (UoM) Michigan's Consumer Sentiment Index edged higher to 71 in September's advanced estimate from 70.3 in August. Meanwhile, gold found some demand amid the steep decline seen in the US stocks and closed virtually unchanged on Friday.

News to Follow

  1. The economic docket will not be offering any high-impact data releases on Monday and Tuesday and gold is likely to fluctuate between key technical levels.

  2. On Wednesday, the Federal Reserve will announce monetary policy decisions alongside the updated Summary of Projections following the FOMC’s two-day meeting. Investors will keep a close eye on the dot plot, which reveals policymakers’ rate outlook, and inflation forecasts.

  3. On Thursday, the IHS Markit will release the preliminary Manufacturing and Services PMI data for the euro area, the UK and the US.

Short-Term Outlook

  • The initial hurdle is located at $1,800 ahead of $1,815.

  • Below $1,750 could open the door for additional losses toward $1,730 below $1,720.

DD Metals is a group company.