Gold – XAU/USD Analysis – July 07, 2021

FOMC Meeting Minutes in the Limelight!

Gold prices were closed at $1795.45 after placing a high of $1815.70 and a low of $1790.30. Gold extended its gains and continued its bullish streak for the 5th consecutive session on Tuesday and reached its 3-weeks highest level. The rising prices of yellow metal could be attributed to the declining U.S. Treasury Yields for the day that approached its lowest level since February 21 and reached 1.34%. The sudden decline in U.S. Treasury yield could be because of the higher demand for gold from central banks worldwide.

The World Gold Council has said that monthly purchasing data showed that central banks started repurchasing gold after a long break. The report suggested that the organization has recorded higher monthly gold purchases from central banks throughout March and April. The organization also said that it was recording the latest data from May, which also followed the same trend.

Gold prices moved above the $1800 level on Tuesday after seeing some fresh gains and declining Treasury Yields. On Wednesday, the Federal Reserve will issue the minutes from the latest meeting of the Federal Open Market Committee. The outcome is expected to shake the market prices as after the meeting Fed revealed its hawkish interest rate changes that pushed the U.S. dollar higher and weighed on gold.

On the data front, at 18:45 GMT, the Final Services PMI remained flat with the expectations of 64.6. At 19:00 GMT, the ISM Services PMI dropped to 60.1 against the forecasted 63.4 and weighed on the U.S. dollar, adding further upward momentum in the yellow metal price. The U.S. Dollar Index was also strong on Tuesday despite the declining U.S. Treasury yields and poor-than-expected ISM Services PMI data release. The DXY plunged to 92.0 level during early trading hours but managed to recover its losses and reached 92.66 level on Tuesday.

Meanwhile, this week, many Democratic lawmakers in the House of Representatives signed a letter addressed to President Joe Biden, which urged Biden to include climate goals in the infrastructure plan as it was laid out in the early stages of the plan. The letter contained the signatures of more than 130 lawmakers and demonstrated that a series of bold actions were needed to take to deal with the climate crisis. However, Biden has recently attempted to reach a deal with a bipartisan group of lawmakers in infrastructure. In accomplishing so, he liquidated many of the environmental pledges he made in the American Jobs Plan. In its response, the Senate Democrats started considering a sweeping roughly $6 trillion reconciliation package that would advance the key elements of President Biden’s infrastructure plan. The plan also added some reforms targeting climate change, health care, and immigration reform.

After this news, speculations were raised that President Joe Biden will veto his $1.2 Trillion Infrastructure Plan, which a bipartisan group of lawmakers just agreed after the President made many compromises of White House priorities. However, President Joe Biden refused such action and confirmed that even if a separate Democratic Spending plan doesn’t pass the Congress, he has no plans to veto a $1.2 trillion bipartisan infrastructure plan. These comments from Biden pushed the U.S. dollar higher as the investors remained optimistic about the continuing economic improvement from the coronavirus pandemic.

Gold Intraday Technical Level

Support Resistance

1785.26 1810.66

1775.08 1825.88

1759.86 1836.06

Pivot Point: 1800.48

Gold - XAU/USD - Technical Outlook

Gold is trading with a bullish bias at the 1,796 level on Wednesday. In the 4 hour timeframe, the precious metal gold has formed an upward channel that’s keeping the precious metal gold support. Gold’s immediate resistance continues to stay at 1,802 levels. Well, it’s the same level that has provided resistance a day before, and now gold is gaining support at 1,796 levels. The 50 periods EMA and upward trendline are extending support at the same level of 1,796. Therefore, the traders are going to keep their eyes on the 1,796 level today. Below this, gold can find the next support at 1,790 and 1,783. Conversely, a bullish crossover of 1,802 levels can lead the gold price towards a 1,814 level. All the best!