On Thursday, July 16, during the European trading session, spot gold prices edged slightly lower, currently hovering around the $4030 level. While overall cooling US inflation data provided support for precious metals, renewed tensions around the Strait of Hormuz have kept crude oil prices and US Treasury yields elevated, capping the potential for further gains in the gold price.
Data released by the US Bureau of Labor Statistics showed that the US Producer Price Index (PPI) for June increased by 5.5% year-on-year, lower than the revised 6.0% in May and below market expectations of 6.2%. The significant slowdown in US producer inflation has reinforced market expectations that the Federal Reserve will keep interest rates stable, reducing the risk of gold facing pressure from a high-interest-rate environment.
From a daily chart perspective, the price is currently below the short-term moving averages. The MACD fast line is around -67.23, with the slow line around -78.36, and the histogram value has recovered to 22.26. The fast line being above the slow line indicates that downward momentum is weakening. However, both lines remain below the zero axis, suggesting the current movement is more akin to a corrective phase within a weak trend rather than a completed trend reversal. Looking at the 4-hour chart, the gold price has formed a rebound channel, with short-term moving averages beginning to turn upward. The RSI indicator has recovered into a relatively strong zone, showing that short-term buying interest has increased. Nevertheless, there is still some resistance in the $4060 to $4080 region. Overall, the trading recommendation is to look for opportunities to sell on rallies.
Trading Strategy for Gold:
Short Position Strategy: Consider selling in the range of $4049-$4051, with a stop loss at $4072, targeting levels around $4013 and $4000.
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