Gold (XAU/USD) Analysis

Key Points: -

1. Gold price maintains its recent gains and remains above the $1,920 level in the early Asian session.
2. The sell-off in US Treasury bond yields is putting pressure on the US Dollar, which is beneficial for the price of Gold denominated in US Dollars.
3. Market focus is now on the release of the Chinese Consumer Price Index (CPI) and Producer Price Index (PPI) later in the Asian session, which will be closely watched by investors.

Today's Scenario: -

Gold price is gaining momentum and remains above the $1,920 level during the early Asian session on Monday. The weaker-than-expected US jobs data released on Friday caused a significant drop in the US dollar, which in turn benefited the price of gold.

According to the Labor Department's report, the Nonfarm Payrolls (NFP) for June increased by 209,000, falling short of the market consensus of 225,000 and declining from the revised figure of 306,000 in May. The Unemployment Rate dropped from 3.7% to 3.6% in June, and Average Hourly Earnings remained unchanged at 0.4%, exceeding the market expectation of 0.3%.

Following the release of the US labor data, the yield on the US 10-year Treasury bonds fell to 4.023%. The US Dollar Index (DXY), which measures the value of the dollar against a basket of six major currencies, dropped to 102.22, reaching its lowest level since June 23. The decline in US Treasury bond yields acted as a headwind for the US dollar, providing support for the price of gold, which is denominated in US dollars.

Moving forward, market participants will be closely monitoring the upcoming Chinese Consumer Price Index (CPI) and Producer Price Index (PPI) data, scheduled to be released later in the Asian session. Furthermore, attention will shift to key US economic indicators such as the Consumer Price Index (CPI), the Producer Price Index (PPI), and the University of Michigan Preliminary Consumer Sentiment Index for July, which are scheduled for later in the week. These data points will play a crucial role in determining the direction of gold prices in the near term. Strong economic data could lead to higher US yields and weigh on the price of gold, while weaker data could have a positive impact on the precious metal.

Diagram of XAU/USD (Gold): -

Economic Events: -

Buy Scenario: -

From a technical perspective, the $1,933-$1,935 region is expected to continue acting as a strong immediate resistance for the Gold price. The 100-day Simple Moving Average (SMA), currently around $1,948-$1,949, is another key level to watch. If the price manages to sustain strength above this level, it could trigger a short-covering rally and push the Gold price towards the $1,962-$1,964 area. Further bullish momentum may drive the price towards the $1,970-$1,972 supply zone. If the momentum persists, it could potentially lead to a break above the psychological level of $2,000, with the next resistance around $2,010-$2,012. Till we did not advise to buy XAU/USD.

Selling Scenario: -

On the downside, the $1,910 level is seen as an immediate support, followed by the $1,900 mark. A breach of these levels could expose the multi-month low around the $1,893-$1,892 region, which was reached in June. A convincing break below this level may open the door for further downside movement, targeting the significant 200-day Simple Moving Average (SMA) around the $1,866-$1,865 zone. The breach of the 200-day SMA could serve as a fresh trigger for bearish traders. We do not advise selling XAU/USD.

Support and Resistance Level: -

 Support               Resistance  

 S1 1911.50   -     R1 1936.70

 S2 1897.99  -      R2 1948.39

 S3 1886.30  -      R3 1961.90