Gold (XAU/USD) Analysis

Key Points: -

• The price of gold continues to show strength, reaching its highest levels in nine weeks, with traders successfully surpassing the support confluence at $1,970.
• The weakness in the US Dollar and China's efforts to attract global investors provide support for the gold price.
• Mixed concerns regarding the Federal Reserve's monetary policy and a light economic calendar contribute to the upward movement in the gold price.
• The XAU/USD pair prepares for next week's Federal Open Market Committee (FOMC) meeting, even though a 0.25% rate hike in July is widely expected.

Today's Scenario: -

Gold Price (XAU/USD) has reached a two-month high, showing strength despite a slight retreat from the daily peak. This is mainly due to the broad decline in the US Dollar, which has resulted in sluggish markets. Positive headlines from China and lower yields have also contributed to the uptrend in XAU/USD.

The People's Bank of China's efforts to ease controls on international investments into the country and their willingness to ease geopolitical tensions with the US if certain conditions are met have boosted the Gold Price. Additionally, weaker-than-expected US housing and consumer spending data have led to expectations of a policy pivot by the Federal Reserve after the anticipated 25 basis points rate hike in July.

Moreover, there are discussions about optimism at US banks and BRICS countries' readiness to use gold-backed currency, which further supports the bullish sentiment for XAU/USD.

However, concerns about higher interest rates for an extended period by major central banks and a lack of optimism in the Asia-Pacific market may be tempering the Gold buyers' enthusiasm. The light economic calendar ahead of the next week's Federal Open Market Committee (FOMC) monetary policy meeting announcements is also influencing the current market sentiment.

Diagram of XAU/USD (Gold): -

Economic Events: -

Buy Scenario: -

On the upside, an immediate resistance level can be found at $1,990, where Fibonacci 161.8% on one-day intersects with the upper band of the Bollinger on the four-hour chart.

If the Gold buyers manage to surpass this resistance, the next challenge awaits at the Pivot Point one-week R2 around $1,996, followed by the $2,010 hurdle, which corresponds to filling the upside gap. Till we did not advise to buy XAU/USD.

Selling Scenario: -

According to our Technical Confluence indicator, the Gold Price has moved higher, surpassing the $1,970 support confluence, which includes the Pivot Point one-day S1, one-month R1, and Fibonacci 23.6% on one-day.

The next key support level is seen at $1,978, where the upper band of the Bollinger on the daily chart intersects with the Fibonacci 61.8% on one-day.

In case the XAU/USD weakens below $1,970, there is an additional downside filter at around $1,965, comprising the Pivot Point one-day S2 and the 5-DMA, before encountering further bearish pressure. We do not advise to sell position in XAU/USD.

Support and Resistance Level: -

 Support               Resistance  

 S1 1970.72   -     R1 1981.90

 S2 1964.68  -      R2 1987.04

 S3 1959.54  -      R3 1993.08