Gold – XAU/USD Analysis – July 19, 2021

Upward Channel Supports

Gold prices closed at $1815.00 after placing a high of $1832.70 and a low of $1809.50. After rising for the previous three consecutive sessions, gold reversed its movement and declined at the ending day of the week. The reversal in yellow metal prices could be attributed to the rising prices of the U.S. dollar on the session. The Dollar Index (DXY) surged on Friday to 92.76 level that ultimately added pressure on the precious metal prices as both are inversely correlated.

Gold was drifted further away from its one-month high level that it hit during the previous session as the U.S. dollar continued its upward momentum and dulled the appeal for the safe-haven metal. On Thursday, the yellow metal reached the 1-month highest level amid the comments from Fed Chair Jerome Powell, who said that the Fed would continue providing its support to the economy in the form of stimulus measures which faded away from the hopes of quick tapering of asset purchases given the rising inflation numbers.

On the data front, at 17:30 GMT, the Core Retail Sales for June surged to 1.3% against the expected 0.4% and supported the U.S. dollar that added further loss in gold prices. In June, the Retail Sales also surged to 0.6% against the projected -0.4% and supported the U.S. dollar, and dragged yellow metal further on the downside.

At 19:00 GMT, the Prelim UoM Consumer Sentiment dropped to 80.8 against the predicted 86.5 and weighed on the U.S. dollar and additional caped loss in gold prices. The Business Inventories declined to 0.5% against the predicted 0.6% and supported the U.S. dollar and weighed on the precious metal. The Prelim UoM Inflation Expectations also remained flat at 4.8%.

The U.S. dollar was strong across the board amid a positive macroeconomic data release on Friday. The Retail Sales and Core Retail Sales data showed a massive improvement in June against the previous expectations, and hence, the greenback gathered strength against the precious metal. Meanwhile, the loss in gold remained limited as the concerns of the fast spread of the Delta variant of coronavirus kept the safe-haven appeal alive in the market. The U.S. officials said on Friday that the Delta variant of COVID-19 was now the dominant variant worldwide, accompanied by a rise in the number of deaths almost entirely among unvaccinated people in the United States.

As per the U.S. Centers for Disease Control and Prevention, the coronavirus cases in the U.S. were up to 70%. The deaths were up to 26% over the previous week as the outbreaks were occurring in the country's regions with low vaccination rates. The virus woes kept the loss in yellow metal limited for the day, and precious metal remained bearish throughout the day over the strength of the U.S. dollar driven by positive macroeconomic data.

Gold Intraday Technical Level

Support Resistance

1821.40 1835.80

1813.80 1842.60

1807.00 1850.20

Pivot Point: 1828.20

Gold - XAU/USD - Technical Outlook

On Monday, the precious metal gold is trading with a neutral bais at 1,812 levels. Gold is holding above an immediate support level of 1,808 level. Since we are not expecting any high-impact economic event from the U.S. today, the gold price may exhibit choppy sessions. Gold's immediate support prevails at a 1,808 level that's extended by an upward channel on the 4-hour timeframe. At the same level, the 50 periods EMA is also supporting gold prices. However, the breakout of this level can expose gold prices towards 1,800 and 1,791 level.

All the best!