Intraday Market Analysis : Gold Awaits Catalyst Breakout

1. Intraday Market Analysis: Gold
Awaits Catalyst Breakout

2. Points TO Be Covered Today:
• XAU/USD Seeks Support
• Gold Now Flirts With The 200-day SMA
• Gold Is Trading $1809.50, Up $5.50 Or +0.30%
• Trading The Initial Headline
• Gold Price Analysis Ahead Of This Weeks FOMC
Meeting
• XAU/USD Remains On Track To Test 200-DMA, US
GDP Awaited
• Gold Cheered The Optimism
• Gold Price Chart – Technical Outlook

3. XAU/USD Seeks Support
• Gold bounces back as the US dollar retreats ahead of
the Fed meeting later today.
• The price has been treading water above 1790 as the
bulls struggle to save the rebound. The dip below the
psychological level of 1800 has shaken out weak hands.
• The current consolidation is a sign of indecision ahead
of a catalyst-driven breakout. 1824 is a major hurdle
and its breach would heighten momentum and resume
the stalled rally.
• Below the support, the bears may push gold towards
1755 and threaten the rebound.

4. XAU/USD Seeks Support - I

5. AUD/USD Consolidates Post-breakout
• The Australian dollar inched higher, supported by
upbeat CPI, in Q2. Though price action struggles
to bounce back after it broke below 0.7410,
support from the previous timid rebound.
• Sentiment has grown increasingly bearish and
sellers are eager to offer at higher prices. 0.7440
has turned from a demand into a supply zone.
• If buyers fail to push above this threshold, 0.7290
would be the path of least resistance. A bearish
breakout could trigger a new round of sell-off to
last November’s lows around 0.7130.

6. Extra Gains Appear Limited
• Traders trimmed their open interest positions
for the second session in a row on Wednesday,
this time by around 5.3K contracts considering
preliminary figures from CME Group.
• Volume, instead, reversed two consecutive
daily pullbacks and went up by around 175.1K
contracts.

7. Gold Now Flirts With The 200-day SMA
• Gold prices extended the rebound past the
$1,800 mark per ounce troy on Wednesday.
• The uptick, however, was on the back of
shrinking open interest, although the increase
in volume was noticeable.
• That said, the 200-day SMA in the $1,820
area emerges as the initial target ahead of the
monthly peaks near $1,835 (July 15).

8. Gold Now Flirts With The 200-day SMA - I

9. Higher as Dovish Powell Sets Up Potential
Breakout Over $1816.10
• Gold futures are trading higher late in the
session on Wednesday following the release
of the Federal Reserve’s monetary policy
statement that was “not too hawkish and not
too dovish.”
• Initially, gold prices fell on the news as
Treasury yields and the U.S. Dollar firmed after
Fed policymakers said the economy was
making progress toward its goals.

10. Gold Is Trading $1809.50, Up $5.50 Or
+0.30%
• However, yields were capped along with the
greenback when Fed Chairman Jerome Powell in
his post-statement new conference cautioned
there was a ways to go before the central bank
would adjust its easy policies.
• This statement triggered a turnaround in gold,
putting the market in a position to breakout over
resistance.
• At 19:38 GMT, December Comex gold is trading
$1809.50, up $5.50 or +0.30%.

11. Trading The Initial Headline
• We’ve said numerous times that you should avoid
trading the initial headline from the Fed when Powell is
scheduled for a news conference.
• If you traded off the first headline, you probably went
home thinking gold was trading weaker. To be a good
analyst/trader, one has to know the characteristics of
each report to analyze/trade successfully.
• In this case, Powell’s dovish comments were enough to
shake out the weaker shorts. This led to the intraday
short-covering rally that may have shifted momentum
enough to fuel a near-term breakout to the upside.

12. Gold Price Analysis Ahead Of This
Weeks FOMC Meeting
• Gold has had a great start to the week ahead of this week's
all-important FOMC rate decision.
• Looking at the chart below, it is clear to see the price is
anchored to the $1800/oz area as it has been oscillating
around the zone for just over a month now.
• Although the volume is building up at that level, it is not
the volume point of control (VPOC) on the chart. This
represents the price on the chart where most contracts
have changed hands.
• At the moment that area is at around $1777.8/oz. As the
price is currently above that point, it could be a good
support level to watch out for should the price move lower.

13. Gold Price Analysis Ahead Of This
Weeks FOMC Meeting
• Sticking with the theme of support areas, the purple zone
underneath the current price has worked well on nine occasions
over the last month or so.
• If the price breaks that area it could be significant as it has been so
stubborn.
• On the upside, it is hard to look beyond the current wave high of
$1835/oz for the next resistance zone. There is some intraday
resistance at the current price point but it does not seem as firm as
the aforementioned level.
• Beyond that, the green zone at $1870/oz would be a great target
for the bulls if the FOMC meeting is kind to yellow metal investors.
• For now, the price looks stuck between $1788/oz and $1835/oz
until there is a firm catalyst for a breakout in either direction.
• The volume has clearly dried up ahead of the even but this could
also due to be summer market conditions. Often the combination
leads to explosive movements.

14. XAU/USD Remains On Track To Test
200-DMA, US GDP Awaited
• Gold price extends three-day uptrend on
Thursday, eyes more gains.
• Dovish Fed-led weaker yields, DXY help gold price
extend beyond $1800.
• Gold price looks to test 200-DMA ahead of the
critical US Q2 GDP.
• Gold price found solid support once again near
$1792 levels and initiated a strong uptrend on
Thursday, reaching as high as $1810 before
settling the day around $1807.

15. The Fed’s Dovish Take Smashed
• Gold bulls got that much-needed boost from the
Fed monetary policy announcement, which
disappointed the hawks big time.
• The Fed maintained its monetary policy settings in its
July meeting, in line with expectations. However, Fed
Chair Jerome Powell said that the central bank is in no
rush to begin rolling back the bond-buying, as the post-
pandemic economic recovery is not there yet.
• The Fed’s dovish take smashed the Treasury yields and
dragged the US dollar lower alongside, benefiting gold
price.

16. Gold Cheered The Optimism
• The precious metal also cheered the optimism around the
US infrastructure stimulus deal, with the Wall Street Journal
(WSJ) reporting that “negotiators of roughly $1 trillion
package are confident they have locked down enough
Republican and Democratic support to advance bill later
Wednesday.”
• Meanwhile, the ongoing surge in coronavirus cases globally
also continues to bode well for the traditional safe-haven
gold.
• In the aftermath of the Fed decision, gold price is extending
its recent run higher, looking to recapture the critical 200-
Daily Moving Average (DMA) at $1821.
• The market mood has improved amid a rebound in the
Chinese stocks, as the People’s Bank of China (PBOC) came
to the rescue and calmed the nerves after the recent crash.

17. Additional Downside Pressure On
The US Dollar
• The recovery in the risk sentiment exerts additional
downside pressure on the US dollar, which bears the
brunt of the Fed’s dovishness.
• The weakness in the US rates combined with looming
covid concerns also keeps the gold bulls afloat.
• Looking forward, the main risk to the gold price rally
could come from the US advance Q2 GDP report.
• The US economy is expected to expand 8.6% in Q2 vs. a
6.4% growth recorded in the previous quarter.
• Upbeat growth numbers could lift the pressure off the
greenback, offering a headwind to gold’s bullish
potential.

18. Gold Price Chart – Technical Outlook

19. Gold Price Is Approaching The
Horizontal 200-DMA Barrier
• As observed on the daily chart, gold price is approaching
the horizontal 200-DMA barrier, as the fundamental factors
appear supportive of a move higher.
• Acceptance above that level could call for a test of the
mildly bearish 50-DMA at $1830.
• Meanwhile, the 21-DMA at $1805 guards the immediate
downside, below which the 100-DMA at $1800 could be
back in play.
• Further south, the range lows of $1792 could offer some
support to gold bulls.
• However, with the 14-day Relative Strength Index (RSI)
holding firmer above the midline, the path of least
resistance appears to the upside in the near term.

20. Intraday Market Analysis: Gold
Awaits Catalyst Breakout

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Intraday Market Analysis: Gold
Awaits Catalyst Breakout