XAU/USD Spikes To Two -Day Tops, Beyond $1,740 Level Posts -Us CPI

1. XAU/USD Spikes To Two-day Tops,
Beyond $1,740 Level Post-Us CPI

2. Points To Be Covered Today:
• Gold Trades Within Complex Descending Triangle
• Gold Chart Mining Indicates
• Consumer Price Index (CPI)
• XAU/USD Spikes To Two-day Tops
• Gold Traded With A Mild Positive
• XAU/USD Below $1682/71 Would Mark A Major Top
• Gold Technical Analysis

3. Gold Trades Within Complex Descending Triangle
• We mentioned in the previous update that gold prices are likely to bounce from the
inflection point to $1,725 and $1,750.
• We also publicly stated that only a break above $1,760 in spot gold prices would be a
bullish signal.
• Gold prices bottom at $1,680 before hitting a resistance level at $1,752.
• It’s been 48 hours, and prices are simply consolidating their decline.
• The measured inflection of $1,680 is also shown in the chart below.
• It is clear that gold prices reversed sharply from the inflection point.
• This strong level also serves as the support for a complex descending triangle.
• We created the complex descending triangle for premium members a few months ago, and
it is still valid today.

4. Emergence Of Descending Triangle With Gold Inflection Point
• According to the premium article, gold is unlikely to fall below
$1,680 in a straight line due to a variety of other factors.
• $1,680 is a significant support juncture not because of the
ascending broadening and descending triangle, but because of the
abundance of other support levels.
• The inflection point also represents a 38.6% retracement calculated
from the Dec 2015 bottom to the All-Time High.

5. Emergence Of Descending Triangle With Gold
Inflection Point - I

6. Gold Chart Mining Indicates
• We haven’t changed our perceptions from the last article. A weekly
close above 1760 might be the first sign of bottom.
• This level of support calculated from the gold chart mining indicates
a significant inflection point.
• If $1,900 levels breaks decisively, gold prices may go much higher.
• A break of $1,680, on the other hand, could signal a significant
change in the medium-term outlook.

7. Consumer Price Index (CPI)
• Tuesday was another inside day candle below $1,760.
• The one-hour drop in gold prices from $1,753 to $1,680 was almost
recovered. It is now up to gold to decide its next move following the release of
the Consumer Price Index (CPI).
• Since the 2008-09 global financial crisis, the Fed has been
pumping liquidity into the financial system.
• However, there has been little growth in GDP as a result.
• We are now at peak liquidity and inflation is the likely outcome.

8. XAU/USD Spikes To Two-day Tops
• COVID-19 jitters assisted gold to gain some positive traction on Wednesday.
• Rising bets for an early Fed taper, rising US bond yields capped any the
upside.
• Stronger USD also acted as a headwind for the metal ahead of the US CPI
data.
• Following the previous day's two-way/directionless price moves, gold gained
some positive traction on Wednesday and moved further away from the early
week flash crash to the lowest level since March.

9. XAU/USD Added To Its Intraday Gains
• Concerns about the potential economic fallout from the fast-
spreading Delta variant of the coronavirus extended some support
to the safe-haven precious metal.
• The XAU/USD added to its intraday gains through the early North
American session and climbed to two-day tops.
• Back closer to the $1,750 level in reaction to mixed US consumer
inflation figures.

10. US Dollar Profit-Taking
• In fact, the headline CPI matched expectations and decelerate to 0.5% in July
from the 0.9% increase recorded in the previous month.
• The yearly rate held steady at 5.4% during the reported month as against
consensus estimates pointing to a modest downtick to 5.3%.
• Conversely, core CPI, which excludes food and energy prices, rose 0.3% MoM
as against the 0.4% expected and 0.9% previous.
• The data prompted some US dollar profit-taking, which, in turn, was seen as
another factor that acted as a tailwind for the dollar-denominated gold.

11. US Dollar Profit-Taking - I
• Investors, however, seem convinced that the Fed will begin scaling back its
pandemic-era stimulus sooner rather than later.
• This was reinforced by a further move up in the US Treasury bond yields.
• This, along with a modest uptick in the US equity futures, might hold traders
from placing any aggressive bullish bets around the non-yielding metal.
• Hence, it will be prudent to wait for some strong follow-through buying before
confirming that gold has bottomed out in the near term and positioning for any
further appreciating move.

12. Gold Traded With A Mild Positive
• Gold traded with a mild positive bias through the early European session,
albeit lacked any follow-through and was last seen hovering around the
$1,733-35 region.
• The XAU/USD, so far, has struggled to capitalize on Monday's rebound from
the flash crash to the lowest level since late March and has been oscillating in
a range over the past two trading sessions.
• Concerns about the economic fallout from the fast-spreading Delta variant of
the coronavirus extended some support to the safe-haven precious metal.

13. Gold Traded With A Mild Positive - I
• That said, expectations for an early tapering of the Fed's massive monetary stimulus
acted as a headwind for the non-yielding gold and capped the upside.
• The incoming US macro data, especially Friday's blockbuster NFP report, marked
another step towards the Fed's goal of substantial further progress in the labour
market recovery.
• This, in turn, forced investors to bring forward the likely timing for policy tightening.
• Moreover, the Fed officials have also started to guide the market towards an early
tapering of the massive pandemic-era stimulus and higher interest rates as soon as
2022.

14. Gold Traded With A Mild Positive - II
• In fact, Atlanta Fed President Raphael Bostic said on Monday that the Fed could
begin tapering between October and December, or earlier if there is another month
or two of strong job gains.
• Adding to this, Boston Fed President Eric Rosengren noted that the US central bank
should announce in September that it will start reducing the pace of its monthly
purchases of Treasury and mortgage bonds this fall.
• Separately, Chicago Fed President Charles Evans said on Tuesday that the
economy is on track to satisfy the Fed's threshold to begin tapering its $120 billion in
monthly asset purchases.
• Evans, however, suggested he was not ready to support announcing a tapering of
bond purchases in September.

15. Goodish Lift To The US Dollar
• Nevertheless, the repricing of a sooner than expected move by the Fed
pushed the yield on the benchmark 10-year US government bond to the
highest level since July 14, closer to the 1.37% threshold.
• This, in turn, provided a goodish lift to the US dollar, which was seen as
another factor that acted as a headwind for dollar-denominated commodities,
including gold.
• The market focus now shifts to the release of the US consumer inflation
figures, which will influence expectations about the Fed's next policy action
and provide a fresh directional impetus to the XAU/USD.

16. XAU/USD Remains Above The $1670 June 2020
Low, Holding The Downside
• “Gold saw a massive spike lower and has sold off to the March lows at
$1679/$1677, which are currently holding. This is reinforced by the $1670 June
2020 low.”
• “The slide lower took out the 2019-2021 uptrend line, which was damaging but has
not done enough to tip the market into bearish territory and for now we believe the
move lower was exhaustive and favour some near-term consolidation and recovery.”
• “Rallies will find initial resistance at the June low at $1750 and face tough resistance
now above $1804 and $1834 (100 and 200 day ma and the mid-July high.”
• “Below 1670 (not favoured) would target the 2018-2021 uptrend at 1581.”

17. XAU/USD Below $1682/71 Would Mark A Major Top
• “Gold has been consistently capped at its 200-day average and with the USD
strengthening and US Real Yields moving back higher, bearish pressures
have sharply re-surfaced.”
• “Whilst $1790 caps, the immediate risk is seen lower for a retest of pivotal
support from the lows for the year and 38.2% retracement of the entire
2015/2020 bull market at $1682/71.”
• “Below $1682/71 would mark a significant top to mark an important change of
trend lower. We would then see support at $1620/15 initially, then $1565/60.”

18. Gold Technical Analysis
• The price of gold is trying to form a new buying base after the recent
sharp collapse, and for gold to become bullish again, it would need
to breach the psychological resistance of $1800.
• I still prefer buying gold from every bearish level, the closest of
which are currently $1710, $1685 and $1670.
• To move to the psychological resistance of $1800, the bulls must first
move to $1765 dollars per ounce.
• The US dollar, and therefore gold, will be affected today by the
announcement of US inflation figures.
• The strength of the numbers is supportive of the dollar and negative
for gold, and vice versa. In addition, the price of gold will be affected
by the extent of risk appetite.

19. Gold Technical Analysis - I

20. XAU/USD Spikes To Two-day Tops,
Beyond $1,740 Level Post-Us CPI

21. Thanks for listening
XAU/USD Spikes To Two-day Tops, Beyond $1,740 Level Post-Us CPI