Gold prices followed an oscillating upward trajectory yesterday, July 22nd. The session opened higher in Asian trading, and following a break above 4050, a short position was closed and a long position initiated around midday. The price continued to climb, and the long position was manually closed after surpassing 4080, securing a modest profit. Activity for the remainder of the session largely fluctuated below that level. Gold ultimately settled at $4,076, marking a third consecutive day of gains.
On Wednesday, July 22nd, the Bank of Canada announced a reduction in its key interest rate from 4.25% to 4.00%, becoming the first G7 central bank to initiate an easing cycle. Markets broadly anticipate that the Federal Reserve and the European Central Bank will follow with their own rate cuts later this year—suggesting a genuine monetary policy pivot may be underway. In the US, existing home sales for June came in at an annualized rate of 3.45 million, significantly below the forecast of 3.79 million and representing a decline of nearly 9%. This marks the third consecutive monthly drop, reaching the lowest level since August 2024.
Coupled with the previously cooled CPI, PPI, and retail sales figures, a growing body of evidence points in one direction: the US economy is slowing. What does this imply for gold? A cooling economy reduces the urgency for the Fed to hike rates, leading to lower US Treasury yields. This, in turn, decreases the opportunity cost of holding non-yielding gold, supporting a price rebound. This chain of logic underpinned last night's significant rally in gold.
Technical Analysis Perspective
From a technical standpoint, the price action is currently stabilizing above the moving average band, which itself has risen to the 4070-4040 zone. As long as the price does not fall back below 4070 today, gold is likely to extend its gains for another 1-2 days in the short term. Initial upside resistance is seen in the previous congestion area around 4035-4038. If the recovery phase extends, the primary focus will shift to the upper boundary of the range and the key resistance near the previous highs at 4190-4200. However, it's crucial to note that on the daily chart, gold has posted multiple consecutive positive closes while moving in tandem with the US Dollar Index. This sudden loss of typical inverse correlation signals a potential hidden risk of erratic movement that must be guarded against. A scenario similar to the false breakout seen on July 3rd cannot be ruled out.
Overall Trading Strategy
In summary, the gold price has broken above the descending trendline established since early July, indicating a short-term strengthening. It is currently testing below the previous high-volume congestion zone around 4135-4140. Given the post-rally consolidation with a bullish bias, the core trading principle is an eight-word mantra: buy on dips, avoid chasing highs. Alternatively, one could wait for a confirmed break above 4135 to follow the trend. Given the potential for choppy action around this level, a cautious approach of watching more and trading less is often most prudent. Regardless of the strategy, strict use of stop-losses is essential. Recent shifts in market sentiment have been swift, so it's unwise to stubbornly fight against emotionally driven price swings.
Intraday Trading Recommendations
Consequently, for today's trading session, the following suggestions are made:
Gold: Consider long positions in the 4115-4120 range, with a stop loss at 4100, targeting 4160-4180. Hold the position if the target is breached. If the price breaks below the 4100 support level, close any long positions and consider shorting, with targets to the downside.
Key Economic Data and Events for Today: Wednesday, July 22, 2026
23:30 US 4-Month Treasury Bill Auction - High Yield
US 4-Month Treasury Bill Auction - Allotted Percentage
US 4-Month Treasury Bill Auction - Bid-to-Cover Ratio
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