Gold – XAU/USD Analysis – July 15, 2021

Unemployment Claims Ahead!

Gold prices were closed at $1827.30 after placing a high of $1831.00 and a low of $1804.85. Gold prices jumped on Wednesday and marked the highest settlement since mid-June on the back of the declining U.S. dollar for the day. The U.S. Dollar Index (DXY) that measures the greenback value against the basket of six major currencies was on the back foot on Wednesday and fell to 92.35 level amid the fresh remarks from the President of the U.S. Federal Reserve, Jerome Powell.

In his testimony before Congress, Powell reassured investors that the central bank of the United States would extend its accommodative monetary policy despite a hike in inflation last month. He added that the U.S. economic recovery has not yet progressed enough to start easing the central bank's massive monthly asset purchases. He further added that inflation was likely to stay high in the coming months.

For the job market, Powell reiterated that it "was still a ways off" from the progress that Fed would like to see before it starts reducing its support from the economy. About the recent PPI data that was released on Wednesday, Powell said that the strong surge in PPI cemented the belief that the central bank will remain on course to be pretty accommodative despite hotter inflation data.

The U.S. Producer Price Index rose more than projections and posted its most significant annual increase in more than ten and a half years. At the same time, Powell said that Fed was firmly believed that current increased prices were associated with the economic reopening and were temporary. He maintained the dovish tone and pushed back against the Fed's concerns would start tapering sooner than expected. This slow path to tapering asset purchases added weight on the U.S. dollar and helped the precious metal to post gains for the day.

On the data front, at 17:30 GMT, the Producer Price Index for June surged to 1.0% against the expected 0.6% and supported the U.S. dollar that further capped gains in precious metal. The Core PPI from June also rose to 1.0% against the projected 0.5% and kept the U.S. dollar that limited the surge in the yellow metal. Meanwhile, the safe-haven yellow metal was also supported by the prevailing risk-off market sentiment driven by the statement from Japan. In its annual defense white paper, Japan reiterated that the growing military tension around Taiwan and the economic and technological rivalry between China and the United States increases the prospects of crisis in the zone as the power balance transfers in favor of China.

Gold Intraday Technical Level

Support Resistance

1811.10 1837.25

1794.90 1847.20

1784.95 1863.40

Pivot point: 1821.05

Gold - XAU/USD - Technical Outlook

The precious metal gold has traded sharply bullish at a 1,827 level amid weakness in the U.S. dollar. On the technical side, gold's immediate resistance prevails at 1,829 levels, and the closing of Doji candles demonstrates indecision among investors. It can be due to the high impact events due to come out during the U.S. sessions like the U.S. Jobless Claims and Fed Chair Powell Testimony. A bullish breakout of 1,829 levels can lead the gold price towards the next resistance area of 1,843 levels. In contrast, the support stays around 1,818 levels today. The 50 periods EMA supports gold at 1,804 level, and the MACD is also closing histograms in the buying zone. Bullish bias dominates in gold today; however, the significant events will remain in focus. All the best!