XAU/USD Battle Lines Well - Defined After Market Storm - Confluence Detector

1. XAU/USD Battle Lines Well-
Defined After Market Storm–
Confluence Detector

2. Points To Be Covered Today:
• Delta Doom And Gloom
• How Is Gold Positioned
• XAU/USD Resistance And Support Levels
• XAU/USD Flirts With Daily Lows, Just Above $1,820 Level
• A Strong Rebound In The US Treasury Bond
• US Dollar Index (DXY)
• Gold Fundamental & Technical Overview

3. Delta Doom And Gloom
• Gold has been holding up amid a market storm.
• The Confluence Detector is showing a well-defined trading
range for the precious metal.
• Gold Price Forecast: Near-term bias remains tilted in favor of
XAU/USD bulls.

4. Delta Doom And Gloom
• Delta doom and gloom – the highly transmissible coronavirus variant adds to
market worries, which include fear that inflation is rearing its ugly head. Is
Gold a hedge against rising costs? That remains an open question.
• On the one hand, if currencies lose value, the precious metal becomes more
valuable.
• On the other hand, central banks could raise interest rates and make yield
less gold less attractive as a haven.
• XAU/USD has held up surprisingly well in the face of Thursday's stock market
decline, and as the weekend approaches, technicals are coming into play.

5. How Is Gold Positioned
• The Technical Confluences Detector is showing that XAU/USD has substantial
support at $1,815, which is the convergence of the Fibonacci 38.2% one-month and
the Pivot Point one-day Support 2.
• The top of the range is defined by a dense cluster of lines at $1,826, which includes
the Fibonacci 61.8% one-day, the Bollinger Band 1h-Middle, the Simple Moving
Average 200-15m and more.
• Beyond the $1815-1826 range, there are additional noteworthy levels to watch in
case of a breakout. Looking up, bulls eye $1,837, which is where the 50-day SMA
and the PP one-week R2 meet.
• On the downside, $1,811 is the confluence of the SMA 200-1h, the Fibonacci 23.6%
one-week and the SMA 50-4h.

6. XAU/USD Resistance And Support Levels

7. XAU/USD Flirts With Daily Lows, Just Above $1,820
Level
• Gold stays firmer around monthly top, holds onto 200-DMA breakout.
• Bulls seem to benefit from doubts over Fed’s next moves even as Powell
keeps rejecting need for policy adjustments.
• Fresh Sino–American tension, covid woes add to the market’s downbeat
sentiment.
• US consumer-centric data awaited, qualitative catalysts are the key.

8. A Strong Rebound In The US Treasury Bond
• Gold remained on the defensive through the first half of the European session
and was last seen hovering near the lower end of its daily trading range, just
above the $1,820 level.
• A strong rebound in the US Treasury bond yields turned out to be one of the
key factors that prompted some profit-taking around the non-yielding yellow
metal.
• Apart from this, a generally positive tone around the equity markets further
acted as a headwind for traditional safe-haven assets, including gold.

9. US Dollar Demand Extended
• That said, a subdued US dollar demand extended some support to the dollar-
denominated commodity and helped limit the downside, at least for the time
being.
• Market participants now look forward to the US economic docket, highlighting
the release of monthly Retail Sales figures.
• The data might influence the USD price dynamics and provide some impetus
to the XAU/USD.
• Apart from this, the US bond yields and the broader market risk sentiment
could further produce some short-term opportunities around gold.

10. Daily Moving Average (DMA)
• Gold price is finding fresh bids near the 200-Daily Moving Average (DMA) at $1826,
as it makes an attempt once again to retest monthly tops at $1834.
• A fresh leg lower in the US dollar across the board amid a recovery in the risk
sentiment is boding well for gold optimists.
• The greenback reverses Fed Chair Jerome Powell-powered rally, as an
improvement in the market mood weighs on its safe-haven appeal.
• At the time of writing, gold price is trading with small losses around $1827, gathering
strength to regain the 100-DMA at $1838.
• Although, the further upside may remain elusive ahead of the critical US Retail
Sales and Consumer Sentiment data.

11. Gold (XAU/USD) Prices
• Gold (XAU/USD) prices print a four-day winning streak to poke the monthly
high with $1,830, up 0.05% intraday, amid Friday’s Asian session.
• The yellow metal’s recent run-up likely takes clues from the risk-off mood and
breached the key 200-DMA hurdle the previous day, opening the gate for the
further upside to another important technical resistance.
• However, the US Dollar Index (DXY) remains firm and curbs the investment
flows to gold due to the greenback’s safe-haven appeal.

12. US Dollar Index (DXY)
• That said, the DXY gained 0.21% on Thursday, after posting the heaviest losses in
over a week the day before yesterday.
• The greenback gauge seems to struggle for a clear direction, while edging higher,
amid indecision over the Federal Reserve’s next moves and mixed data.
• US Fed Chair Jerome Powell reiterated less urgency for policy adjustments during
the second round bi-annual testimony the previous day but St. Louis President
James Bullard contrasted with the push for tapering.
• Also, mixed manufacturing figures from Philadelphia and New York, coupled with
weaker-than-prior Jobless Claims, have an inflation component arguing
the Fed policymakers’ rejection to act.

13. US Dollar Index (DXY) - I
• Also weighing on the sentiment could be the escalating coronavirus concerns in the West,
as well as Asia–Pacific nations, which recently raised downside risk to the economic
recovery from the pandemic.
• Furthermore, the fresh jitters between the US and China, due to the expected new
sanction on Beijing and the dragon nation’s rejection of the Sino-American diplomat’s
meeting, add to the market’s risk-off mood.
• Amid these plays, S&P 500 Futures drop 0.23% whereas the US 10-year Treasury yields
seesaw around 1.30% after two consecutive days of downside.
• As the subdued markets keep challenging the gold buyers, US US Retail Sales and the
preliminary readings of the Michigan Consumer Sentiment Index, expected 0.4% for June
and 86.5 for July respectively, will be crucial to follow. Though, risk catalysts like the
updates and US-China news, not to ignore the Fedspeak, will be on the top to track for
fresh impulse.

14. Technical analysis
• Gold’s sustained upside break of 200-DMA gains support from firmer MACD signals,
not to forget successful trading beyond 100-DMA and 13-day-old support line, keeps
buyers hopeful.
• However, a horizontal area comprising early May’s top and mid-June lows
surrounding $1,845 will test the metal’s further upside.
• Also challenging the up-moves will be the June 02 lows near $1,855 and the $1,880
levels before highlighting the $1,900 hurdle that holds the key to June’s peak of
$1,916.
• Meanwhile, pullback moves need to close below the 200-DMA level of $1,826 to test
the short-term rising trend line support of around $1,809. Though, bears are less
likely to take the risk of entry until gold prices stay beyond the 100-DMA level of
$1,791.

15. Gold: Daily Chart

16. Gold Technical Overview

17. Gold Technical Overview - I
• From a technical perspective, Wednesday’s strong move-up confirmed a near-term bullish breakout
through a one-week-old trading range.
• A subsequent move beyond the 200-day SMA might have already set the stage for additional gains.
• Hence, some follow-through strength towards the $1,845-46 region, en-route the next major hurdle
near the $$1,866 area, now looks a distinct possibility.
• The momentum could further get extended towards the $1,880 level before bulls eventually aim to
reclaim the $1,900 round-figure mark.
• On the flip side, the overnight swing lows, around the $1,820 region, nearing the trading range
resistance breakpoint, now seems to protect the immediate downside.
• Any further pullback might be seen as a buying opportunity near the $1,808-07 zone. This is
followed by the $1,800 mark, which if broken decisively will negate any near-term positive bias and
prompt some aggressive technical selling around the XAU/USD.

18. Gold Fundamental Overview
• Gold remained on the defensive through the first half of the European session and was last seen
hovering near the lower end of its daily trading range, just above the $1,820 level.
• A strong rebound in the US Treasury bond yields turned out to be one of the key factors that
prompted some profit-taking around the non-yielding yellow metal.
• Apart from this, a generally positive tone around the equity markets further acted as a headwind for
traditional safe-haven assets, including gold.
• That said, a subdued US dollar demand extended some support to the dollar-denominated
commodity and helped limit the downside, at least for the time being.
• Market participants now look forward to the US economic docket, highlighting the release of
monthly Retail Sales figures. The data might influence the USD price dynamics and provide some
impetus to the XAU/USD.
• Apart from this, the US bond yields and the broader market risk sentiment could further produce
some short-term opportunities around gold.

19. Gold Fundamental Overview - I

20. XAU/USD Battle Lines Well-
Defined After Market Storm–
Confluence Detector

21. XAU/USD Battle Lines Well-
Defined After Market Storm–
Confluence Detector