- Gold futures markets dropped recently as open interest and volume shrank, suggesting further downside is limited. Gold is finding support around $1,860 per ounce. - Gold prices retreated above $1,800 due to a stronger US dollar but holds ground near $1,812. Risk-off sentiment from COVID concerns is boosting the dollar and weighing on gold. - Technical signals hint gold's recent upswing may have topped, but gold only faces more weakness if it breaks below $1,800, with $1,860 now a key support level.

1. Gold Futures: Downside Looks
Contained

2. Points To Be Covered Today:
• Gold Futures Markets Dropped
• Gold Now Looks To $1,860
• XAU/USD Retreats Above $1,800 On Greenback Strength
• Gold (XAU/USD) Holds Lower Ground
• Gold's Persistent Weakening
• Gold Positioning
• Gold Technical Analysis
• Forex Today: Risk-off To Continue Leading The Way
• Gold And The US Dollar

3. Gold Futures Markets Dropped
• Open interest in gold futures markets dropped for the second
session in a row on Friday, this time by around 5.2K
contracts considering flash data from CME Group.
• Volume, in the same line, shrank for the third straight
session, now by around 8.8K contracts.

4. Gold Now Looks To $1,860
• Friday’s moderate pullback in gold prices was accompanied
by shrinking open interest and volume, hinting at the idea
that further downside looks out of favour in the very near
term.
• There is a minor hurdle at the 50-day SMA at $1,836 ahead
of the Fibo level at $1,860 per ounce troy.

5. Gold Now Looks To $1,860 - I

6. XAU/USD Retreats Above $1,800 On Greenback
Strength
• Gold is sitting at a critical area of support in the open.
• Bears need a break of $1,800 for supply to kick in.
• Possible correction to $1,800 as key resistance holds.
• Gold prices down with stocks after US consumer confidence data disappoints.
• Risk-off flows face few barriers from barebones economic, earnings
calendars.
• Technical positioning hints gold upswing from late June might have topped.

7. Gold (XAU/USD) Holds Lower Ground
• Gold (XAU/USD) holds lower ground near $1,812 ahead of Monday’s
European session.
• The yellow metal’s latest pullback could be traced to the market’s rush to risk-
safety amid the coronavirus (COVID-19) woes in Asia-Pacific nations.
• Also weighing on the market sentiment, putting a safe-haven bid under the US
dollar and dragging gold, could be the indecision over the Fed’s next moves.
• This could well back the Financial Times (FT) piece suggesting that the bullish
bets on the US Dollar Index (DXY) jump to the highest in over a year.

8. The Light Calendar Day
• Given the light calendar day ahead, headlines concerning the Delta variant of
the covid, mainly from the UK and Australia, will be the key to watch for fresh
impulse.
• Gold is starting off the day flat and where it left off from Friday at around
$1,810.
• The gold price on Friday ended down 0.94%, falling from a high of $1,832.06
to a low of $1,809.03 while the US dollar eked out a slight gain following an
upbeat Retail Sales report.

9. Dollar Index (DXY)
• The dollar index DXY, which measures the greenback against a basket of six
currencies, was ending 0.16% higher at 92.712. The index is up 0.6% for the week.
• US Retail Sales unexpectedly rose in June as demand for goods remained strong.
• Solid data and a shift in interest rate expectations after the Federal Reserve flagged
in June sooner-than-expected hikes in 2023 have contributed to the strength in the
greenback in recent weeks.
• Investors, for now, are seeking carry and considering that gold does not hold a
similar carry advantage, speculative flows into precious metals have remained
subdued.

10. Gold's Persistent Weakening
• Gold's persistent weakening against real yields could see the complex
weaken before the pricing for Fed hikes supports higher prices.
• That being said, the carry-FX space is not seeing much love.
• The recent increase of concerns over the spread of the delta variant is hurting
risk appetite which could fall into the hands of both the price of gold and the
US dollar.
• COVID spread weighing on market's risk appetite

11. Gold Positioning
• ''Money managers only marginally increased their gold length, despite sinking
real yields in the US'', analysts at TD Securities explained.
• ''Indeed, gold prices are still struggling to firm, in spite of the extremely
positive price action in real yields which sent US10y TIPS prices back towards
their pandemic-era highs,'' the analysts added.
• ''In contrast, the yellow metal can't manage to break north of its 200dma. This
highlights a sharp divergence in capital flows as high inflation prints have kept
breakevens elevated, primarily as a function of carry.''

12. Gold Technical Analysis
• Technically, gold's breakout
from its recent trading
range may be attracting
some interest from
technicians, but it has
recently taken a turn for
the worst:
• However, only a break
below the 1,800 thresholds
would likely upset the
bulls.

13. Gold Price Is Licking Its Wounds
• Gold price is licking its wounds near $1810 after Friday’s $17 drop
from weekly highs of $1834.
• Friday’s tumble came in on the back a broadly stronger US dollar
after mixed economic data refueled concerns over the pace of the
economic recovery in the world’s largest economy.
• Mixed signals from Fed Chair Jerome Powell on the monetary policy
during the last week also helped the greenback.

14. Daily Moving Average (DMA)
• Despite the uptick in gold price, a correction remains well in place after it
closed the week well below the critical 200-Daily Moving Average (DMA) at
$1825.
• So far this Monday’s trading, the risk-off mood remains at full steam, thanks to
the mounting concerns over the highly contagious Delta covid strain, which
has boosted the flows into the US bonds and gold at the expense of the
Treasury yields.
• However, it remains to be seen if the gold price recovery could extend ahead,
as the safe-haven demand for the US dollar remains on the rise, with the S&P
500 futures losing 0.50% amid covid woes and a quiet start of a new week.

15. Forex Today: Risk-off To Continue Leading The Way
• What you need to know on Monday, July 19:
• The dollar keeps strengthening on growth-related concerns. Mixed data
released in the US on Friday somehow confirmed investors are concerned
about the slower pace of growth.
• Wall Street edged lower, posting substantial losses on Friday after posting
record highs.
• US Treasury yields remained depressed, with that on the 10-year note
settling at 1.30%.

16. High-Yielding Currencies
• High-yielding currencies were hit by the dismal mood. EUR/USD settled around 1.1800
while the GBP/USD pair fell to 1.3760, nearing a multi-month low of 1.3730.
• Commodity-linked currencies were sharply down. AUD/USD reached a fresh 2021 low of
07391, while USD/CAD finished the week at 1.2605.
• Coronavirus: on Saturday, the UK reported 54,674 new coronavirus cases, the biggest
one-day increase since January, and 41 new deaths.
• In the US, not all states are reporting as previously, although all indicators continued to
rise. Nevertheless, the % of deaths among those vaccinated is lower of that of the common
flu.
• Gold suffered from the greenback’s strength, with the bright metal settling at $1,811.87.
Crude oil prices consolidate losses on Friday, with WTI settling at $71.15 a barrel.

17. Futures Trade Lower, Gold Prices Decline
• Stock market
• Futures in the United States have been trading lower over
the weekend after stock markets fell in Friday's session.
• As investors weighed the potential ramifications of rising
Delta variant cases against optimism relating to corporate
earnings for the second quarter.

18. Futures Trade Lower, Gold Prices Decline - I
• Inflation
• Inflation has been on everyone's mind in recent weeks. Consumers believe that prices will
jump 4.8% over the next year, as per the consumer sentiment index released by the
University of Michigan on Friday.
• This would be the most significant surge since the middle of 2008.
• However, the rise in inflation is being driven by a few products and is unlikely to have an
impact on the performance of major indices, as evidenced by UBS's revision of the S & P
500's price target to 4,650 by June 2022.
• It is worth noting that retail sales have outperformed expectations, rising 0.6% versus the
expected 0.4% decline.
• This has once again confirmed that business is returning to pre-pandemic normalcy with
each passing day.

19. Gold And The US Dollar
• The dollar has risen in value in recent weeks, with the dollar index, which
measures the currency against six other currencies, rising 0.11% to 92.675.
• The index surged by 0.6% in the previous week. The dollar appreciated
after Fed Chair Jerome Powell stated that interest rates would be raised sooner
than expected in 2023.
• Gold, on the other hand, has declined in value as the value of the dollar has risen.
• The precious metal did not benefit from a drop in US real yields, which could
indicate that it will fall even further.
• However, an increase in demand from the world's largest buyer, China, would
provide support for the precious metal.

20. Gold Futures: Downside Looks
Contained

21. THANKS FOR LISTENING
Gold Futures: Downside Looks Contained