• Gold price sees a positive start to the week early Monday, $2,400 tested.   
• US Dollar drops with US Treasury bond yields on dovish Fed bets and risk-on mood.
• Renewed Middle East concerns underpin the safe-haven Gold price.
• Gold buyers eye a daily close above 21-day SMA for a sustained recovery.

Gold price is building on its previous recovery early Monday, having defended the key support at $2,360 on a weekly closing basis. Gold buyers fight back control heading into the critical central banks’ bonanza week, with the US Federal Reserve (Fed) – the main event risk for the bright metal.

Gold price kicks off the Fed week on strong footing

The renewed upside in Gold price could be attributed to the extension of Friday’s risk-recovery into Asia, as Asian stocks track the Wall Street rebound amid a bout of profit-taking ahead of a key week.

Risk-flows diminish the appeal of the safe-haven US Dollar while the US Treasury bond yields bear the brunt of increased expectations of a dovish Fed hold this week. Markets are fully pricing in a Fed rate cut in September, according to the CME Group’s FedWatch Tool. Another cut remains on the table for December.

Additionally, over the weekend, fresh tensions in the Middle East spark a flight to safety in the traditional safety net, Gold price, reinforcing the buying interest in the yellow metal.

On Saturday,  12 children and young adults were killed in a rocket strike while playing football in the Israeli-occupied Golan Heights. The Israel Defense Forces (IDF)  blamed the Iran-backed militant group, Hezbollah for the attack, saying that it conducted air strikes against seven Hezbollah targets “deep inside Lebanese territory”.

The rising tensions have the potential to trigger an all-out war between Israel and Hezbollah, which has prompted investors to scurry for safety in Gold price.

On Friday, Gold price staged an impressive rebound from near two-week lows of $2,353 after the Greenback turned south after the core PCE price index data, the Fed’s preferred inflation gauge, steadied at an annual pace of 2.6% in June, driving up optimism that the central bank will begin cutting rates in September. 

Gold markets remain expectant of the potential dovish policy outlook from the Fed and the Bank of England (BoE) later in the week while the developments surrounding the Middle-East geopolitical tensions will remain in focus.  

Gold price technical analysis: Daily chart

Gold buyers jumped back into the game after the bright metal yielded a weekly closing above the key 50-day Simple Moving Average (SMA) at $2,360. At that level, the month-long rising trendline support coincides, making it a strong support.

The 14-day Relative Strength Index (RSI) also reclaimed the 50 level, currently near 52.50, turning the tide back in favor of Gold optimists.

Acceptance above the previous support of the 21-day SMA at $2,392 is needed on a daily closing basis to extend the recovery toward the $2,400 mark.

The next upside targets are seen at the $2,412 area and the $2,425 static resistance.

On the flip side, Gold price needs a daily close below the abovementioned key confluence support at $2,360 to initiate a fresh downtrend toward the 100-day SMA support at $2,327.

Buyers, however, could find some comfort at the $2,350 psychological level.

 

• Gold price sees a positive start to the week early Monday, $2,400 tested.   
• US Dollar drops with US Treasury bond yields on dovish Fed bets and risk-on mood.
• Renewed Middle East concerns underpin the safe-haven Gold price.
• Gold buyers eye a daily close above 21-day SMA for a sustained recovery.

Gold price is building on its previous recovery early Monday, having defended the key support at $2,360 on a weekly closing basis. Gold buyers fight back control heading into the critical central banks’ bonanza week, with the US Federal Reserve (Fed) – the main event risk for the bright metal.

Gold price kicks off the Fed week on strong footing

The renewed upside in Gold price could be attributed to the extension of Friday’s risk-recovery into Asia, as Asian stocks track the Wall Street rebound amid a bout of profit-taking ahead of a key week.

Risk-flows diminish the appeal of the safe-haven US Dollar while the US Treasury bond yields bear the brunt of increased expectations of a dovish Fed hold this week. Markets are fully pricing in a Fed rate cut in September, according to the CME Group’s FedWatch Tool. Another cut remains on the table for December.

Additionally, over the weekend, fresh tensions in the Middle East spark a flight to safety in the traditional safety net, Gold price, reinforcing the buying interest in the yellow metal.

On Saturday,  12 children and young adults were killed in a rocket strike while playing football in the Israeli-occupied Golan Heights. The Israel Defense Forces (IDF)  blamed the Iran-backed militant group, Hezbollah for the attack, saying that it conducted air strikes against seven Hezbollah targets “deep inside Lebanese territory”.

The rising tensions have the potential to trigger an all-out war between Israel and Hezbollah, which has prompted investors to scurry for safety in Gold price.

On Friday, Gold price staged an impressive rebound from near two-week lows of $2,353 after the Greenback turned south after the core PCE price index data, the Fed’s preferred inflation gauge, steadied at an annual pace of 2.6% in June, driving up optimism that the central bank will begin cutting rates in September. 

Gold markets remain expectant of the potential dovish policy outlook from the Fed and the Bank of England (BoE) later in the week while the developments surrounding the Middle-East geopolitical tensions will remain in focus.  

Gold price technical analysis: Daily chart

Gold buyers jumped back into the game after the bright metal yielded a weekly closing above the key 50-day Simple Moving Average (SMA) at $2,360. At that level, the month-long rising trendline support coincides, making it a strong support.

The 14-day Relative Strength Index (RSI) also reclaimed the 50 level, currently near 52.50, turning the tide back in favor of Gold optimists.

Acceptance above the previous support of the 21-day SMA at $2,392 is needed on a daily closing basis to extend the recovery toward the $2,400 mark.

The next upside targets are seen at the $2,412 area and the $2,425 static resistance.

On the flip side, Gold price needs a daily close below the abovementioned key confluence support at $2,360 to initiate a fresh downtrend toward the 100-day SMA support at $2,327.

Buyers, however, could find some comfort at the $2,350 psychological level.

 

• Gold price sees a positive start to the week early Monday, $2,400 tested.   
• US Dollar drops with US Treasury bond yields on dovish Fed bets and risk-on mood.
• Renewed Middle East concerns underpin the safe-haven Gold price.
• Gold buyers eye a daily close above 21-day SMA for a sustained recovery.

Gold price is building on its previous recovery early Monday, having defended the key support at $2,360 on a weekly closing basis. Gold buyers fight back control heading into the critical central banks’ bonanza week, with the US Federal Reserve (Fed) – the main event risk for the bright metal.

Gold price kicks off the Fed week on strong footing

The renewed upside in Gold price could be attributed to the extension of Friday’s risk-recovery into Asia, as Asian stocks track the Wall Street rebound amid a bout of profit-taking ahead of a key week.

Risk-flows diminish the appeal of the safe-haven US Dollar while the US Treasury bond yields bear the brunt of increased expectations of a dovish Fed hold this week. Markets are fully pricing in a Fed rate cut in September, according to the CME Group’s FedWatch Tool. Another cut remains on the table for December.

Additionally, over the weekend, fresh tensions in the Middle East spark a flight to safety in the traditional safety net, Gold price, reinforcing the buying interest in the yellow metal.

On Saturday,  12 children and young adults were killed in a rocket strike while playing football in the Israeli-occupied Golan Heights. The Israel Defense Forces (IDF)  blamed the Iran-backed militant group, Hezbollah for the attack, saying that it conducted air strikes against seven Hezbollah targets “deep inside Lebanese territory”.

The rising tensions have the potential to trigger an all-out war between Israel and Hezbollah, which has prompted investors to scurry for safety in Gold price.

On Friday, Gold price staged an impressive rebound from near two-week lows of $2,353 after the Greenback turned south after the core PCE price index data, the Fed’s preferred inflation gauge, steadied at an annual pace of 2.6% in June, driving up optimism that the central bank will begin cutting rates in September. 

Gold markets remain expectant of the potential dovish policy outlook from the Fed and the Bank of England (BoE) later in the week while the developments surrounding the Middle-East geopolitical tensions will remain in focus.  

Gold price technical analysis: Daily chart

Gold buyers jumped back into the game after the bright metal yielded a weekly closing above the key 50-day Simple Moving Average (SMA) at $2,360. At that level, the month-long rising trendline support coincides, making it a strong support.

The 14-day Relative Strength Index (RSI) also reclaimed the 50 level, currently near 52.50, turning the tide back in favor of Gold optimists.

Acceptance above the previous support of the 21-day SMA at $2,392 is needed on a daily closing basis to extend the recovery toward the $2,400 mark.

The next upside targets are seen at the $2,412 area and the $2,425 static resistance.

On the flip side, Gold price needs a daily close below the abovementioned key confluence support at $2,360 to initiate a fresh downtrend toward the 100-day SMA support at $2,327.

Buyers, however, could find some comfort at the $2,350 psychological level.

 

The cost of a flat white is set to keep rising above inflation as the coffee industry reels from “unprecedented” supply-side shocks, the chairman of Lavazza has warned.

Poor harvests, soaring raw material costs and a security crisis affecting shipping through the Suez Canal are among the factors that have driven prices this summer.

On Tuesday, robusta beans hit an all-time high of $4,667 a metric ton on the London-based ICE Futures Europe market.

Giuseppe Lavazza said that trend was likely to continue throughout the year, driving prices of on-the-shelf coffee up by as much as 10 per this year.

Speaking at Wimbledon, which like Royal Ascot, left, is sponsored by the Italian family-run company, Lavazza set out the challenges facing the industry.

“The coffee supply chain has been dramatically under pressure for the past three years because of the price of raw materials,” he said.

He predicted this would drive the price of coffee for UK consumers between 20% and 25% higher between the start of 2023 and the end of 2024.

“People are going to have accept that the price of coffee is going to get more expensive in the short-term,” he said.

Among the “very strong headwinds” is the crisis in the Red Sea, where attacks by Iranian-backed Houthis on cargo ships have caused shipments of coffee from the Far East and East Africa to avoid the Suez Canal and instead circumnavigate Africa, massive increasing costs and causing buyers to wait an extra four weeks for supplies to reach their warehouses.

“It’s impossible for ships to go through (the Suez Canal) Ships have to circumnavigate Africa and to enter into Europe from the northern ports instead of the Mediterranean ports.

“It means the cost of shipping has risen a lot. During the pandemic the cost of shipping rose ten times average, and now we have increasing cost four times the average because of this long route.”

Mr Lavazza said the rise in the global price of coffee was unlike anything ever seen in history of the industry – and isn’t going to change in the foreseeable future.

Forecasts for harvest in Vietnam — the world’s second-biggest coffee producer behind Brazil — are “not very solid”, causing a multi-million bag shortage of supply which he said was fuelling commodity market speculation, pushing prices up even higher.

“The market will stay volatile, very unpredictable,” he said.

A major concern for Lavazza is the European Union Deforestation Regulation (EUDR), due to come into force in 2025.

The regulation aims to slash global deforestation linked to the consumption of coffee and other commodities including beef, palm oil and rubber.

It requires complete traceability for every coffee bean entering the bloc, with hefty fines for companies breaching the rules.

Mr Lavazza said he supported the law’s intention to protect the environment but warned it could have a devastating effect on the industry unless changes are made.

“Tracking all the coffee supply chain is very difficult. For many countries it’s absolutely impossible because they don’t have any infrastructure to do that.

“You need to plot your farm using geo satellite coordinates and enter all the data on a digital platform. This maybe could be done for farmers in Europe — but not in many producing countries.

“The problem is the system they’ve decided to adopt is imply not applicable to many farmers around the world.”

Calling for a delay to the implementation, Mr Lavazza said only Brazil was ready to comply with the regulations, making it “too risky” for buyers to purchase coffee beans from elsewhere.

“It’s one of the most dangerous things we have to cope with.”

Despite these industry-wide pressures, Mr Lavazza said the company, which was founded by Luigi Lavazza in Turin 129 years ago, was “still growing”.

“In 2010, the company had a turnover of about 1billion euros. In 2023 we reach 3billion euros.”

Sales across its markets continue to “pretty good” with UK revenues reaching £117 million in 2023 – 10% up on the previous year.

Break Below 2.00 Targets 1.92

A decisive break down below 2.00 will indicate a likely continuation of the bearish trend. Natural gas would then be heading towards the next lower support zone that is anchored around the 78.6% Fibonacci retracement at 1.92. The 1.94 price area can also be watched as it was resistance previously at the minor swing high on April 10 and may show support now. Notice that there is an unfilled gap that will be filled at 1.94.

Be aware that support from the month of May was seen at 1.91, a three-month low. If the current bearish retracement does not find support above 1.91, a monthly bearish continuation signal would be triggered on a drop below 1.91. If that happens then the next lower support zone from around 1.85 to 1.80 could be next on the agenda.

Weekly Bearish Signal Triggers Today

The decline today triggered a bearish weekly continuation as last week’s low of 2.015 was exceeded to the downside. Since the current week ends today natural gas is on track to close weak, near the lows of this week’s trading range. This is bearish behavior that increases the chance for a test of lower support levels.

If it ends the week below last week’s low a clearer bearish indication will be given. Regardless, this will be the sixth week in a row of lower weekly highs and lower weekly lows therefore signaling a bearish continuation of the decline.

Rally Above Today’s High of 2.08 Signals Strength

There remains a chance that the 2.00 support zone will hold and see demand increase. That scenario would be indicated on a rally above today’s high of 2.08. The 20-Day MA at 2.26 along with this week’s high of 2.27 would be the initial upside pivots.

• Gold price holds the bounce off the $2,350 level as Friday’s trading kicks off.  
• US Dollar rebound falters with US Treasury bond yields, supporting the Gold price upswing.
• China’s economic woes remain a cause for concern while September Fed rate cut odds stay intact.
• Gold buyers defend 50-day SMA at $2,360 head into the monthly US PCE data release.

Gold price has managed to defend the key support near $2,360, consolidating weekly losses in Friday’s Asian session. Traders now shift their focus toward the monthly release of the US Personal Consumption Expenditures (PCE) Price Index after Thursday’s second-quarter Gross Domestic Product (GDP).

Will US inflation data trigger a fresh leg lower in Gold price?

US GDP expanded at an annualized rate of 2.8% in Q2 2024, doubling from the 1.4% growth reported in the previous quarter. The US Dollar (USD) jumped higher in an immediate reaction to the US GDP report but quickly returned to a familiar range, as markets digested the quarterly core PCE inflation and Jobless Claims data.

“The core PCE deflator (the Federal Reserve’s preferred inflation measure) rose 2.9% at an annualized rate in Q2, down from 3.7% in the previous quarter, indicating a moderation in inflationary pressure,” analysts at RBC Economics noted. Meanwhile, Initial Jobless Claims dropped 10,000 to a seasonally adjusted 235,000 for the week ended July 20, the Labor Department said on Thursday. 

Markets continued to fully price in a US Federal Reserve (Fed) interest-rate cut in September, despite the acceleration in the US economic growth, as disinflation remains in progress. Gold price initially reacted negatively to the US GDP release, accelerating its downside to over two-month lows of $2,353 but staged a modest comeback on softer US core PCE inflation reading, settling Thursday above the key support at $2,360.

In the first half of Thursday’s trading, Gold price tumbled over 1%, having faced rejection at $2,400, undermined by profit-taking amid the market’s repositioning ahead of high-impact US economic data. China’s economic slowdown concerns also played a part in the Gold price sell-off, as investors raised demand concerns from the world’s top yellow metal consumer.

Gold buyers also found some respite from the persistent weakness in the USD/JPY pair, as the Japanese Yen carry trading unwinding gathered pace ahead of next week’s Bank of Japan’s (BoJ) policy meeting. Odds of a BoJ rate hike next week are on the rise, with additional credence coming in from Tokyo inflation data released early Friday.

Later on Friday, the annual core US PCE Price Index is expected to show an increase of 2.5% in June, a tad softer than the 2.6% booked in May. The headline annual figure is also expected to rise by 2.5% in the same period. An in-line with market expectations or a softer-than-expected US core PCE inflation print is likely to serve as a saving grace to Gold buyers.

The reaction to the data is mostly discount after Thursday’s quarterly core PCE data but the end-of-the-week flows and positions adjustments, ahead of the Fed policy announcements and Nonfarm Payrolls data next week, could spike up volatility around Gold price.

Gold price technical analysis: Daily chart

Gold sellers retain control early Friday, with the 14-day Relative Strength Index (RSI) holding its position below the 50 level, currently near 46.

They are once again attacking the key 50-day Simple Moving Average (SMA) at $2,360. Gold price needs a daily close below that level to initiate a fresh downtrend toward the 100-day SMA support at $2,324.

Buyers, however, could find support again at the $2,350 psychological level

On the flip side, the immediate resistance is seen at the previous support of the 21-day SMA at $2,387, above which the $2,400 mark could be retested.

The next recovery targets are seen at the $2,412 area and the $2,425 static resistance.

 

• Gold price holds the bounce off the $2,350 level as Friday’s trading kicks off.  
• US Dollar rebound falters with US Treasury bond yields, supporting the Gold price upswing.
• China’s economic woes remain a cause for concern while September Fed rate cut odds stay intact.
• Gold buyers defend 50-day SMA at $2,360 head into the monthly US PCE data release.

Gold price has managed to defend the key support near $2,360, consolidating weekly losses in Friday’s Asian session. Traders now shift their focus toward the monthly release of the US Personal Consumption Expenditures (PCE) Price Index after Thursday’s second-quarter Gross Domestic Product (GDP).

Will US inflation data trigger a fresh leg lower in Gold price?

US GDP expanded at an annualized rate of 2.8% in Q2 2024, doubling from the 1.4% growth reported in the previous quarter. The US Dollar (USD) jumped higher in an immediate reaction to the US GDP report but quickly returned to a familiar range, as markets digested the quarterly core PCE inflation and Jobless Claims data.

“The core PCE deflator (the Federal Reserve’s preferred inflation measure) rose 2.9% at an annualized rate in Q2, down from 3.7% in the previous quarter, indicating a moderation in inflationary pressure,” analysts at RBC Economics noted. Meanwhile, Initial Jobless Claims dropped 10,000 to a seasonally adjusted 235,000 for the week ended July 20, the Labor Department said on Thursday. 

Markets continued to fully price in a US Federal Reserve (Fed) interest-rate cut in September, despite the acceleration in the US economic growth, as disinflation remains in progress. Gold price initially reacted negatively to the US GDP release, accelerating its downside to over two-month lows of $2,353 but staged a modest comeback on softer US core PCE inflation reading, settling Thursday above the key support at $2,360.

In the first half of Thursday’s trading, Gold price tumbled over 1%, having faced rejection at $2,400, undermined by profit-taking amid the market’s repositioning ahead of high-impact US economic data. China’s economic slowdown concerns also played a part in the Gold price sell-off, as investors raised demand concerns from the world’s top yellow metal consumer.

Gold buyers also found some respite from the persistent weakness in the USD/JPY pair, as the Japanese Yen carry trading unwinding gathered pace ahead of next week’s Bank of Japan’s (BoJ) policy meeting. Odds of a BoJ rate hike next week are on the rise, with additional credence coming in from Tokyo inflation data released early Friday.

Later on Friday, the annual core US PCE Price Index is expected to show an increase of 2.5% in June, a tad softer than the 2.6% booked in May. The headline annual figure is also expected to rise by 2.5% in the same period. An in-line with market expectations or a softer-than-expected US core PCE inflation print is likely to serve as a saving grace to Gold buyers.

The reaction to the data is mostly discount after Thursday’s quarterly core PCE data but the end-of-the-week flows and positions adjustments, ahead of the Fed policy announcements and Nonfarm Payrolls data next week, could spike up volatility around Gold price.

Gold price technical analysis: Daily chart

Gold sellers retain control early Friday, with the 14-day Relative Strength Index (RSI) holding its position below the 50 level, currently near 46.

They are once again attacking the key 50-day Simple Moving Average (SMA) at $2,360. Gold price needs a daily close below that level to initiate a fresh downtrend toward the 100-day SMA support at $2,324.

Buyers, however, could find support again at the $2,350 psychological level

On the flip side, the immediate resistance is seen at the previous support of the 21-day SMA at $2,387, above which the $2,400 mark could be retested.

The next recovery targets are seen at the $2,412 area and the $2,425 static resistance.

 

Bullish Reversal Triggers on Monday

On Monday natural gas showed strength as upward momentum kicked in triggering a bullish breakout of the internal downtrend line. The day ended with a wide range green candlestick pattern and a five-day closing high. This is bullish behavior that indicates there is likely more upside to go. A low volatility day following yesterday’s sharp move should be healthy for developing rally. Last week’s high of 2.285 is the next upside pivot.

First Upside Target is the 20-Day MA

There are a couple of initial higher targets that are well identified. Simplified, the 20-Day MA is at 2.36 and it can also be used as a guide relative to the top downtrend line. If that level is broken to the upside, the 200-Day MA comes into sight at 2.43. There are additional price target levels around the 200-Day line that generate an area of possible resistance. They include the 38.2% Fibonacci retracement at 2.45 and a prior swing low around 2.48.

Since the 38.2% retracement is generally considered a minimum potential retracement in Fibonacci analysis, it seems that the 2.45 level has a good chance of being hit. Certainly, given the relationship to the downtrend line, the 20-Day line should be reached at a minimum. Once there was an upside breakout of the internal downtrend line the higher trendline became a target.

Higher Target Zone up at 2.56

Subsequently, if an upside breakout above the 200-Day line can be maintained, the chance of reaching a higher target zone from around 2.56 to 2.59 improves. That price zone comes from the 50-Day MA and 50% retracement, respectively. Notice that an advance above the 200-Day line puts natural gas above the top downtrend line, one indication further confirming a bullish reversal of the recent bearish correction.

For a look at all of today’s economic events, check out our economic calendar.

• I recognize that we have bounced quite significantly from a crucial support level underneath.
• Spot natural gas continues to look at the $2.00 level as a major barrier, and we have rallied quite a bit since we got closer to that region.
• By doing so, it does suggest that the market is more likely than not going to try to jump into some type of recovery phase, but also, it’s worth noting that this time of year is typically somewhat tougher natural gas, so I think we just got oversold.

Technical Analysis

The technical analysis for this market is rather bullish, and at this point I think it’s worth noting that the $2.00 level is not only previous support and resistance, but it is also an area that has a lot of psychology attached to it. Because of this, it’s not overly surprising to see this market bounce from there. That being said, I don’t necessarily think that we are going to start a huge new bullish market at the moment, but we should be paying attention to the 50-Day EMA above, which is closer to the $2.42 level, and is dropping. I think we can break above there, then it’s obvious that the natural gas market could pick up a little bit of momentum.

There is a lot of heat in the western part of the United States right now, so demand for natural gas probably will pick up, but at the end of the day it’s probably also worth noting that we are typically very soft this time of year, and I think we are in a situation where traders will continue to look at this through the prism of building up a bigger position for the fall. After all, when natural gas really starts to take off is when the heat demands, and the United States start increasing. Right now, we are nowhere near there, but as we get deeper into the year as far as futures markets are concerned, it then makes the idea of buying natural gas much more sensible. In other words, I think you can buy on the dip, but I would not do so with a huge position.

Ready to trade our daily Forex forecast? Here’s some of the top demo trading accounts to check out. 

XAU/USD Current price: $2,404.79

• Key earnings reports and upcoming US first-tier events push investors to the sidelines.
• Treasury yields shed some ground, weighing on the US Dollar.
• XAU/USD bounced back, but additional gains in the near term seem unlikely.

Spot Gold recovered on Tuesday, changing hands at $2,403 a troy ounce. XAU/USD bounced from a weekly low of $2,383.78 posted on Monday as demand for the US Dollar receded ahead of United States (US) first-tier data and key earnings reports. Nevertheless, market participants are increasing their bets that the Federal Reserve (Fed) will deliver a 25 basis point (bps) interest rate cut in September and a similar one in December, also limiting the USD bullish potential.

Finally, easing government bond yields undermines demand for the Greenback. The 10-year Treasury note currently offers 4.23%, while the 2-year note yields 4.49%, down roughly 3 bps each.

A scarce macroeconomic calendar and upcoming US first-tier events further exacerbate the lack of clear directional strength. Investors are waiting for the preliminary estimate of the Q2 Gross Domestic Product (GDP) to be out on Friday, alongside revisions for the Personal Consumption Expenditures (PCE) Price Index in the same period,  the Fed’s favourite inflation gauge. Furthermore, the country will release the June PCE inflation data on Friday, which will have a lesser impact than usual but will still affect the USD.

XAU/USD short-term technical outlook  

The daily chart for the XAU/USD pair shows it is bouncing from the 50% Fibonacci retracement of the $2,293.54/$2,483.68 rally at $2,389.30. At the same time,  a bullish 20 Simple Moving Average (SMA) heads higher just below the mentioned Fibonacci level, while the longer ones also advance below the longer ones, in line with the dominant bullish trend. Finally, the Momentum indicator maintains its downward slope within positive levels, while the Relative Strength Index (RSI) has turned marginally higher at around  54, supporting another leg higher.

In the near term, and according to the 4-hour chart, an upward extension seems limited. XAU/USD topped around the 38.2% retracement of the mentioned rally, providing statict resistance at $2,411.25. Furthermore, a bearish 20 SMA converges with the Fibonacci level, reinforcing it. Meanwhile, the Momentum indicator aims north at around its 100 line, while the RSI indicator remains directionless at 42.

Support levels: 2,389.30 2,377.10 2,364.00  

Resistance levels: 2,411.25 2,425.70 2,439.90

XAU/USD Current price: $2,404.79

• Key earnings reports and upcoming US first-tier events push investors to the sidelines.
• Treasury yields shed some ground, weighing on the US Dollar.
• XAU/USD bounced back, but additional gains in the near term seem unlikely.

Spot Gold recovered on Tuesday, changing hands at $2,403 a troy ounce. XAU/USD bounced from a weekly low of $2,383.78 posted on Monday as demand for the US Dollar receded ahead of United States (US) first-tier data and key earnings reports. Nevertheless, market participants are increasing their bets that the Federal Reserve (Fed) will deliver a 25 basis point (bps) interest rate cut in September and a similar one in December, also limiting the USD bullish potential.

Finally, easing government bond yields undermines demand for the Greenback. The 10-year Treasury note currently offers 4.23%, while the 2-year note yields 4.49%, down roughly 3 bps each.

A scarce macroeconomic calendar and upcoming US first-tier events further exacerbate the lack of clear directional strength. Investors are waiting for the preliminary estimate of the Q2 Gross Domestic Product (GDP) to be out on Friday, alongside revisions for the Personal Consumption Expenditures (PCE) Price Index in the same period,  the Fed’s favourite inflation gauge. Furthermore, the country will release the June PCE inflation data on Friday, which will have a lesser impact than usual but will still affect the USD.

XAU/USD short-term technical outlook  

The daily chart for the XAU/USD pair shows it is bouncing from the 50% Fibonacci retracement of the $2,293.54/$2,483.68 rally at $2,389.30. At the same time,  a bullish 20 Simple Moving Average (SMA) heads higher just below the mentioned Fibonacci level, while the longer ones also advance below the longer ones, in line with the dominant bullish trend. Finally, the Momentum indicator maintains its downward slope within positive levels, while the Relative Strength Index (RSI) has turned marginally higher at around  54, supporting another leg higher.

In the near term, and according to the 4-hour chart, an upward extension seems limited. XAU/USD topped around the 38.2% retracement of the mentioned rally, providing statict resistance at $2,411.25. Furthermore, a bearish 20 SMA converges with the Fibonacci level, reinforcing it. Meanwhile, the Momentum indicator aims north at around its 100 line, while the RSI indicator remains directionless at 42.

Support levels: 2,389.30 2,377.10 2,364.00  

Resistance levels: 2,411.25 2,425.70 2,439.90

• Gold price clings to $2,400, snapping a four-day downtrend early Tuesday.
• The US Dollar turns south with US Treasury bond yields, despite risk-off returning.    
• China’s economic worries could act as a headwind for Gold price.
• The daily technical setup continues to favor Gold buyers but $2,425 holds the key.

Gold price is making another attempt to reclaim $2,400 on a sustained basis, replicating the moves seen during Monday’s Asian trading. Gold price appears to be benefiting from a typical market caution and renewed China’s economic worries and ahead of key US earnings reports.

Gold price awaits fresh catalysts for a clear direction

Despite the return of risk-off flows, the US Dollar (USD) turns defensive, tracking the retreat in the US Treasury bond yields from two-week highs. Reports that US Vice President Kamala Harris secured 1976 delegates to become the Democratic Party’s presumptive nominee for November’s presidential election exert downward pressure on the Greenback.

It’s worth noting that Donald Trump’s chances of winning the election have narrowed after Joe Biden stepped down to allow Harris to run for the White House.  A Democratic win in the US presidency would imply higher taxes and the need for lower borrowing costs, suggesting that the US Federal Reserve (Fed) would have to keep the policy accommodative. This, in turn, would be bearish for the US Dollar in the long term.

Traders turn risk-averse, as worries over China’s economic slowdown mount while nervousness sets in before earnings at Tesla and Alphabet are due after Tuesday’s New York close. Investors scurry for safety in the traditional safe-haven Gold during such times. However, China is the world’s top yellow metal consumer and the slowing growth raises concerns over its physical demand for Gold.

According to Goldman Sachs, “Chinese gold demand is now cyclically soft due to recent price surges, but central banks in emerging markets including China are likely to continue to buy gold frequently, whether disclosed or not,” per Reuters.

Traders also eagerly await the US Gross Domestic Product (GDP) report for the second quarter on Thursday and Personal Consumption Expenditures (PCE) inflation data for June on Friday before placing any directional bets on the Gold price.

In the meantime, the mid-tier US housing data, the political developments and the corporate earnings will drive risk trends, eventually impacting the USD-denominated Gold price.

From a broader perspective, Gold price remains supported by the Fed interest-rate cut expectations, with a September easing almost a done deal. Markets are currently pricing in a September rate cut, as futures show a 97% chance, according to the CME Group’s FedWatch Tool.

Gold price technical analysis: Daily chart

Gold price stays supported so long as the 14-day Relative Strength Index (RSI) holds above the 50 level. The indicator is currently at 53.50.

The 21-day  and 50-day Simple Moving Averages (SMA) Bull Cross also remains in play, justifying the constructive outlook for Gold price.

if the Gold price rebound gathers strength, the $2,425 static resistance will be tested. The next topside barrier is seen at the previous lifetime high at $2,450, above which buyers will target the new all-time high of $2,484 reached last week.

On the other side, should sellers return, Gold price could test the 21-day SMA at $2,379 before falling further to the 50-day SMA support at $2,361.

The last line of defense for Gold optimists is seen at the $2,350 psychological level.

 

• Gold price clings to $2,400, snapping a four-day downtrend early Tuesday.
• The US Dollar turns south with US Treasury bond yields, despite risk-off returning.    
• China’s economic worries could act as a headwind for Gold price.
• The daily technical setup continues to favor Gold buyers but $2,425 holds the key.

Gold price is making another attempt to reclaim $2,400 on a sustained basis, replicating the moves seen during Monday’s Asian trading. Gold price appears to be benefiting from a typical market caution and renewed China’s economic worries and ahead of key US earnings reports.

Gold price awaits fresh catalysts for a clear direction

Despite the return of risk-off flows, the US Dollar (USD) turns defensive, tracking the retreat in the US Treasury bond yields from two-week highs. Reports that US Vice President Kamala Harris secured 1976 delegates to become the Democratic Party’s presumptive nominee for November’s presidential election exert downward pressure on the Greenback.

It’s worth noting that Donald Trump’s chances of winning the election have narrowed after Joe Biden stepped down to allow Harris to run for the White House.  A Democratic win in the US presidency would imply higher taxes and the need for lower borrowing costs, suggesting that the US Federal Reserve (Fed) would have to keep the policy accommodative. This, in turn, would be bearish for the US Dollar in the long term.

Traders turn risk-averse, as worries over China’s economic slowdown mount while nervousness sets in before earnings at Tesla and Alphabet are due after Tuesday’s New York close. Investors scurry for safety in the traditional safe-haven Gold during such times. However, China is the world’s top yellow metal consumer and the slowing growth raises concerns over its physical demand for Gold.

According to Goldman Sachs, “Chinese gold demand is now cyclically soft due to recent price surges, but central banks in emerging markets including China are likely to continue to buy gold frequently, whether disclosed or not,” per Reuters.

Traders also eagerly await the US Gross Domestic Product (GDP) report for the second quarter on Thursday and Personal Consumption Expenditures (PCE) inflation data for June on Friday before placing any directional bets on the Gold price.

In the meantime, the mid-tier US housing data, the political developments and the corporate earnings will drive risk trends, eventually impacting the USD-denominated Gold price.

From a broader perspective, Gold price remains supported by the Fed interest-rate cut expectations, with a September easing almost a done deal. Markets are currently pricing in a September rate cut, as futures show a 97% chance, according to the CME Group’s FedWatch Tool.

Gold price technical analysis: Daily chart

Gold price stays supported so long as the 14-day Relative Strength Index (RSI) holds above the 50 level. The indicator is currently at 53.50.

The 21-day  and 50-day Simple Moving Averages (SMA) Bull Cross also remains in play, justifying the constructive outlook for Gold price.

if the Gold price rebound gathers strength, the $2,425 static resistance will be tested. The next topside barrier is seen at the previous lifetime high at $2,450, above which buyers will target the new all-time high of $2,484 reached last week.

On the other side, should sellers return, Gold price could test the 21-day SMA at $2,379 before falling further to the 50-day SMA support at $2,361.

The last line of defense for Gold optimists is seen at the $2,350 psychological level.

 

Bullish Momentum Points to Higher Targets Starting with 2.39

Today’s sharp rally triggered a breakout of the internal downtrend line, and the subsequent strong bullish reaction shows the market aware of the line. Once the internal downtrend line is broken, the higher trendline becomes a target. Since the purple 20-Day MA, currently at 2.39, recently converged with the higher downtrend line, it can be watched together with the trendline as a potential resistance zone. Moreover, the 20-Day line is quickly followed by a confluence of indicators showing potential resistance at a range from 2.44 to 2.48. It starts with the blue 200-Day MA at 2.44, and includes the 38.2% Fibonacci retracement at 2.45, then ends at an interim swing low of 2.475 from May 28.

The May 28 swing low had significance previously as it was part of the rising price structure of higher swing lows and higher swing highs. Once it was broken to the downside following the June 11 trend high, another bearish reversal signal was indicated. It happened to correlate with support around the 200-Day MA at the time.

Higher Target Zone Begins at 2.57

In case the 2.475 level is broken to the upside, the next higher price zone looks to be from 2.57 to 2.59. The first level is the orange 50-Day MA and the second is the 50% retracement zone at 2.59. Of course, if this higher price level is reached, natural gas will be back above the 200-Day line, 20-Day line and downtrend line, a sign of strength.

Weakness an Opportunity to Position for Upside Continuation

Given the above short-term bullish scenario pullbacks into today’s price range of 2.09 to 2.27 will likely be used by traders as an opportunity to position themselves for a continuation of today’s bounce. If last week’s low completed the retracement, then not only is the 20-Day MA an initial target, but today’s bullish momentum may be the beginning of an advance that eventually attempts another breakout of the top long-term downtrend line.

For a look at all of today’s economic events, check out our economic calendar.