2. Points To Be Discussed Today:
• XAU/USD Climbs To Two-week Tops
• The US Dollar
• The Initial Weekly Jobless Claims
• Fed Outcome Smashed The US Dollar
• Gold Price: Key levels to watch
• Gold Futures: Extra gains appear limited
• Gold Now Flirts With The 200-day SMA
• Gold Technical & Fundamental Overview
3. XAU/USD Climbs To Two-week Tops
• Gold price rallied towards SMA200 one-day on dovish Fed.
• Covid concerns underpin the safe-haven gold despite risk rebound.
• Gold bears await break below 100-day SMA at $1,796
• Gold built on the previous day's post-FOMC rebound from the
vicinity of the $1,790 horizontal support and gained strong follow-
through traction on Thursday.
4. The US Dollar
• This marked the third successive day of a positive move and was sponsored
by the heavily offered tone surrounding the US dollar.
• A weaker greenback tends to benefit dollar-denominated commodities,
including gold.
• The USD continues to be weighed down by the Fed Chair Jerome Powell's
dovish turn at the post-meeting press conference on Wednesday and was
further pressured by Thursday's disappointing US macro releases.
5. The Initial Weekly Jobless Claims
• The first estimate showed that the world's largest economy expanded by
6.5% annualized pace during the April-June period, missing consensus
estimates pointing to an 8.5% growth.
• Adding to this, the Initial Weekly Jobless Claims fell more than expected.
• The dismal data reaffirmed market expectations that the Fed will stick to its
ultra-lose monetary policy stance for a longer period.
• This was seen as another factor that drove some additional flows towards the
non-yielding gold, though a combination of factors might keep a lid on any
further gains.
6. A Turnaround In The Global Risk Sentiment
• A turnaround in the global risk sentiment – as depicted by
indications of a strong opening in the US equity markets – might
hold investors from placing aggressive bets around the safe-haven
XAU/USD.
• Moreover, the risk-on impulse provided a goodish lift to the US
Treasury bond yields, which could also act as a headwind for gold
and cap the upside, at least for the time being.
7. A Turnaround In The Global Risk Sentiment - I
• Nevertheless, spot prices, for now, seem to have found acceptance
above the very important 200-day SMA and seems poised to climb
further.
• However, it will still be prudent to wait for some follow-through
buying beyond monthly swing highs, around the $1,832-34 region.
• Before positioning for any further near-term appreciating move.
8. Daily Moving Average (DMA)
• Gold price has accelerated its advance and hits fresh weekly highs at $1819, closing in on the
critical 200-Daily Moving Average (DMA) at $1821.
• The dovish Fed-induced weakness in the US Treasury yields and the dollar is main underlying
reason behind the persistent upbeat mood around gold price.
• Fed Chair Jerome Powell turned dovish by stating that the employment sector is far from
‘substantial progress’ and therefore, "Fed has not made any decisions about the timing of taper.“
• Meanwhile, the rebound in Chinese stocks has lifted the overall market mood, exacerbating the
pain in the safe-haven dollar while benefiting gold price. Gold bulls also draw support from the
renewed optimism on a potential US infrastructure stimulus deal.
• Traders now await the US advance Q2 GDP report for the next direction in gold price. The US
economy is expected to expand by 8.6% in Q2 vs. a 6.4% growth recorded in the first quarter.
9. Fed Outcome Smashed The US Dollar
• The Fed once again came to the rescue of the bulls, lifting gold price from around
the key support around $1792 to take on the upside beyond the $1800 mark.
• So far this Thursday, gold price is extending the post-Fed rally towards the critical
SMA200 one-day at $1821, as Chair Jerome Powell expressed no hurry to embark
upon the tapering journey.
• Powell also dismissed higher inflation as transitory. The dovish Fed outcome
smashed the US dollar alongside the Treasury yields, reviving gold buyers.
• Meanwhile, rising covid cases globally also keep gold’s safe-haven appeal alive, as
investors now look forward to the US advance Q2 GDP report for fresh hints on the
economic recovery, which could have a significant impact on gold trades.
10. Gold Price: Key Levels To Watch
• The Technical Confluences Detector shows that gold has recaptured critical
resistance at $1815, which is the convergence of the Fibonacci 38.2% one-
month, pivot point one-day R1 and Bollinger Band one-hour Upper.
• A firm break above the latter has opened gates towards $18211, the
intersection of the SMA200 one-day and pivot point one-week R1.
• If the buyers seize control above that barrier, then a test of the previous
week’s high of $1825 could be in the offing.
• The next relevant upside target is envisioned at the Bollinger Band one-day
Upper.
11. Confluence Of The SMA50
• The confluence of the SMA50 one-day and the pivot point one-day R3 at $1832 is
the last line of defense for gold bears.
• Alternatively, a dense cluster of healthy support levels is stacked up near $1811,
which will offer an immediate cushion to the downside.
• That zone is the meeting point of the Fibonacci 61.8% one-week, previous day’s
high and Bollinger Band four-hour Upper.
• Bulls will then seek some support at $1807, the SMA10 one-day.
• Further south, the bears need to crack this key demand zone around $1804, where
the Fibonacci 38.2% one-day and one-week coincide with the SMA50 four-hour and
SMA5 one-day.
• The confluence of the SMA100 one-day and Fibonacci 61.8% one-day at $1798 is
the level to beat for gold sellers.
13. Gold Futures: 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 contract
14. 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).
16. Gold Technical Overview
• Nevertheless, spot prices, for now, seem to have found acceptance
above the very important 200-day SMA and seems poised to climb
further.
• However, it will still be prudent to wait for some follow-through
buying beyond monthly swing highs, around the $1,832-34 region,
before positioning for any further near-term appreciating move.
18. Gold Fundamental Overview
• Gold built on the previous day's post-FOMC rebound from the vicinity of the $1,790 horizontal support and gained
strong follow-through traction on Thursday. This marked the third successive day of a positive move and was
sponsored by the heavily offered tone surrounding the US dollar. A weaker greenback tends to benefit dollar-
denominated commodities, including gold.
• The USD continues to be weighed down by the Fed Chair Jerome Powell's dovish turn at the post-meeting press
conference on Wednesday and was further pressured by Thursday's disappointing US macro releases. The first
estimate showed that the world's largest economy expanded by 6.5% annualized pace during the April-June period,
missing consensus estimates pointing to an 8.5% growth.
• Adding to this, the Initial Weekly Jobless Claims fell more than expected. The dismal data reaffirmed market
expectations that the Fed will stick to its ultra-lose monetary policy stance for a longer period. This was seen as
another factor that drove some additional flows towards the non-yielding gold, though a combination of factors might
keep a lid on any further gains.
• A turnaround in the global risk sentiment – as depicted by indications of a strong opening in the US equity markets –
might hold investors from placing aggressive bets around the safe-haven XAU/USD. Moreover, the risk-on impulse
provided a goodish lift to the US Treasury bond yields, which could also act as a headwind for gold and cap the upside,
at least for the time being.
