Gold (XAU/USD) Analysis
Key Points: -
- Gold prices trim their most substantial weekly increase since April amidst a combination of mixed sentiment and the Federal Reserve blackout.
- The pullback in XAU/USD is supported by China-related news and data, as well as the addition of Friday's US statistics, all contributing to the subdued atmosphere ahead of the Federal Open Market Committee (FOMC) meeting.
- Market participants are closely watching for risk catalysts and clues from the US-China relationship, as the Gold price remains above a crucial support confluence.
Today's Scenario: -
The Gold Price (XAU/USD) continues to face downward pressure for the second consecutive day, extending its retreat from a one-month high. This decline is primarily attributed to the consolidation of the US Dollar, which is recovering from recent losses during a slow start to the week.
Regarding the factors influencing the rebound of the US Dollar Index (DXY), last week's positive US inflation data and concerns surrounding China have garnered significant attention. These factors, along with market expectations of a 0.25% increase in benchmark interest rates at July's Federal Open Market Committee (FOMC) meeting, have exerted downward pressure on the Gold Price. Additionally, the two-week silence period before the FOMC meeting has allowed the US Dollar to recover and weigh on the price of Gold. Despite the lackluster session and the US Dollar's inability to gain strength, comments from the International Monetary Fund (IMF) suggesting inflation concerns continue to impact the XAU/USD price.
Looking ahead, the light economic calendar poses a challenge for XAU/USD traders, particularly due to the pre-Fed silence from policymakers. However, the NY Empire State Manufacturing Index for June, released on Monday, and the US Retail Sales report for June, scheduled for Wednesday, will be important indicators to monitor for clearer market directions. Above all, risk catalysts will play a crucial role in determining the near-term trajectory of the Gold Price.
Diagram of XAU/USD (Gold): -
Economic Events: -
Buy Scenario: -
On the upside, the 50-day SMA and the Fibonacci 38.2% level on a one-day timeframe suggest a nearby resistance around $1,960 for the Gold Price.
Following that, around $1,972, the upper band of the Bollinger on the four-hour chart, the Pivot Point one-month R1, and the Fibonacci 161.8% level on a one-day timeframe could pose obstacles to any upward movement in XAU/USD.
In the event that Gold buyers maintain control above $1,972, a convergence of the Pivot Point one-week R1 and the Pivot Point one-day R3 near $1,978 could be the last line of defense for sellers before potentially pushing the price towards the psychological magnet of $2,000. Till we did not advise to buy XAU/USD.
Selling Scenario: -
According to our Technical Confluence Indicator, the Gold Price remains comfortably above a significant support zone, which includes the 10-day Simple Moving Average (SMA) and the Fibonacci 61.8% level on a one-week timeframe. This support area is currently around $1,935.
However, if there is further downside, Gold sellers should pay attention to the immediate support level around $1,945, which is defined by the Pivot Point one-day S2 and the Fibonacci 38.2% level on a one-week timeframe.
It is worth noting that if XAU/USD weakens below $1,935, it becomes susceptible to declining towards the psychological round figure of $1,900. Subsequently, the monthly low near $1,893 could present an additional challenge for Gold bears. We do not advise selling XAU/USD.
Support and Resistance Level: -
S1 1949.51 - R1 1962.38
S2 1943.80 - R2 1969.54
S3 1936.64 - R3 1975.25