Upward Trendline Supports at 1,805
Gold prices were closed at $1812.60 after placing a high of $1830.50 and a low of $1808.90. Gold reversed its momentum on Friday and dropped for the day; however, yellow metal remained green for the week after the U.S. Federal Reserve supported the hopes of investors that interest rates will remain lower for some time. The recent decline in gold prices could also be attributed to the comeback of the U.S. dollar. The greenback became strong across the board and broke its 4-day bearish streak on Friday as market sentiment improved and the U.S. macroeconomic data came in favor of the U.S. dollar.
The U.S. Dollar Index that measures the greenback value against the basket of six major currencies rose to 92.20 level and supported the U.S. dollar. At the same time, the benchmark Treasury yield on a 10-year note from the U.S. remained under pressure on Friday and reached a 1.22% level. On the data front, at 17:30 GMT, the Core CPE Price Index for June dropped to 0.4% against the forecasted 0.6% and weighed on the U.S. dollar that capped further loss in gold prices. The Employment Cost Index dropped to 0.7% against the projected 0.9% and weighed on the U.S. dollar that limited the rise of gold prices. Personal Income from June rose to 0.1% against the predicted -0.4% and supported the U.S. dollar that added loss in gold prices.
Personal Spending in June also surged to 1.0% against the anticipated 0.7% and supported the U.S. dollar that dragged gold even lower for the day. At 18:45 GMT, the Chicago PMI for July increased to 73.4 against the projected 64.2 and supported the U.S. dollar that added extra loss in gold prices. At 19:00 GMT, the Revised UoM Consumer Sentiment in July remained flat at 81.2. The Revised UoM Inflation Expectations dropped in July to 4.7% against the previous 4.8%.
Meanwhile, the cases rose in Germany as the European Union struggled to cope with the difference between demand and supply of the vaccine shots. Given this fact, Pfizer and Moderna increased their prices of vaccine shots as Europe saw side effects from other shots and supply constraints. These developments surrounding the coronavirus vaccine and spread kept the losses in gold prices limited for the day.
Gold Intraday Technical Level
Pivot Point: 1816.38
Gold - XAU/USD - Technical Outlook
On Monday, gold is trading with a bearish sentiment at 1,808 levels. It has violated the intraday pivot point support level of 1,816 and is now holding near an immediate support level of 1,805. An upward trendline is extending this support level on a 4-hourly chart. A bearish breakout of this level exposes gold prices towards the next support level of 1,797 level. The MACD and 50 M.A. are suggesting strong selling bias in gold. However, above 1,805 level, gold’s immediate resistance stays at 1,818 level. Bullish crossover of this level exposes gold price towards 1,826 level. This week will be crucial for the U.S. dollar and gold, as the U.S. economy will be releasing its NFP & Unemployment figures on Friday. All the best!
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