Downtrend Remains Dominant

There is the potential for today’s advance to strengthen further and lead to higher prices. Nevertheless, natural gas remains in a clear downtrend, below both the downtrend line and the 20-Day MA. Downward pressure continues to dominate following last week’s bearish close. On a weekly basis, it completed a bearish shooting star candlestick pattern on the weekly chart (not shown).

Moreover, last week closed at the low of the week and below the previous week’s low of 2.015. This is bearish behavior in that time frame. What this analysis seems to indicate is that, if natural gas bounces higher it remains likely to encounter resistance that turns prices back down for a retest of trend lows and possibly a drop through last week’s low.

Below 1.99 Targets 1.94

If last week’s low is busted to the downside, then natural gas looks to be heading towards a possible support zone from around 1.94 to 1.91. The first price level is a prior minor swing high, while the second completes a 78.6% Fibonacci retracement. Further down is the filling of the gap from April at 1.85, followed 1.83 and 1.80. The 1.80 price level is the middle of the bottom symmetrical triangle pattern, while 1.83 completes a falling ABCD pattern where the CD leg of the decline is twice the price change in the first AB leg.

Resistance Likely at Trendline or 20-Day Line

Today’s high of 2.10 is nearby resistance. If there is a bullish breakout above the high then resistance may be encountered around the downtrend line or 20-Day MA, currently at 2.23. However, last week’s high of 2.27 is a key resistance level as a rally above it will trigger a bullish reversal as a lower swing high comprising the price structure of the downtrend correction would be violated.

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

• 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.