On Tuesday, July 15th, the analysis suggested that the ongoing escalation of military conflict between the US and Iran, which supported a significant oil price rally to a new one-month high, intensified inflation concerns and reinforced expectations for Federal Reserve interest rate hikes. This scenario bolstered the US dollar's strength, putting downward pressure on gold prices. Consequently, the recommended strategy was to watch for support at $3980, followed by $3940, while monitoring resistance levels at $4035 and $4075, and then $4100.
Looking at the subsequent price action, on Tuesday during the European session, gold found support at $4013, rebounded, and after the US market open, broke above the intraday high of $4034 set during the Asian and European sessions. It reached a daily high of $4103. However, the price failed to hold above the key $4100 level, quickly retreating to find support at $4042. At Wednesday's open, gold faced continued selling pressure, dipping to $4017 before stabilizing, and is currently trading around $4030. Overall, gold's downside appears limited for now, while its upward momentum remains relatively weak, keeping the price oscillating within a range of $4000 to $4100.
Wolfinance Star Analyst attributes Tuesday's US-session gold rally primarily to cooling US inflation data, which dampened market expectations for further Fed rate hikes and provided support for gold. Specifically, data released on Tuesday showed the US June seasonally adjusted CPI month-on-month at -0.4% and core CPI month-on-month at 0%, both falling short of market expectations and prior readings. The June CPI and core CPI figures also underperformed forecasts and previous values, marking the largest monthly decline since April 2020. This unexpected cooling of inflation data largely ruled out market expectations for a Fed rate cut in July and reinforced expectations for the Fed to hold rates steady this year, supporting the short-term gold spike. However, the extent of the rally was capped by the US-Iran military escalation pushing oil prices to a new one-month high, which implies persistent inflation pressures and suggests the Fed may need to maintain higher interest rates for longer. Additionally, hawkish remarks from the Fed Chair during Congressional testimony further contained gold's rebound.
On the daily chart, gold's rally met resistance and retreated, maintaining a bearish consolidation pattern. Key support levels to watch include the intraday low of $4017, which also served as the support level for Tuesday's rebound in the European and US sessions, followed by Tuesday's low of $3983. If selling pressure persists, the half-year low of $3943 is the next level to monitor. On the upside, immediate resistance is seen around $4040 near the 4-hour MA5 and MA10 moving averages, followed by the daily Bollinger Band midline at $4090. The 5-day moving average has formed a bearish crossover pointing downward, the MACD indicator's golden cross is turning lower, and both the KDJ and RSI indicators show bearish crosses. These short-term technical signals suggest a continued risk of further declines for gold.
Intraday Gold Outlook: Cooling US inflation data has tempered market expectations for Fed rate hikes, yet gold's rebound has been limited. Rising oil prices driven by Middle East tensions support the case for the Fed maintaining higher interest rates for an extended period, continuing to suppress gold prices. The recommended trading approach is to treat the market with a range-bound mindset. Key support levels to watch are $3983 and $3943, while resistance levels are at $4040 and $4090.
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