On Thursday, July 16th, international gold prices encountered resistance and retreated, closing lower. The decline was driven by resistance from moving averages, bearish data from the US weekly initial jobless claims, and the failure of US-Iran geopolitical tensions to ease. Iran's warning that Houthi forces would block Red Sea oil transport routes if the US attacked its power network kept oil prices near a one-month high, exacerbating inflation concerns. Remarks from Federal Reserve official Lorie Logan suggesting interest rate hikes are needed to combat inflation further pressured gold prices lower. The metal erased gains from the previous two days and set a fresh weekly low, indicating increased bearish momentum and suggesting a potential short-term test of support near $3900, with a further target around $3700.
In terms of specific price action, gold opened the Asian session at $4062.84 per ounce, briefly reaching an intraday high of $4065.97 before encountering resistance and turning lower. The selling pressure persisted throughout the day, intensifying during the US session to touch an intraday low of $3969.54. The session closed at $3976.27, with a daily range of $96.43, representing a loss of $86.57 or 2.13%.
Looking ahead to Friday, July 17th, international gold opened with narrow, sideways movement, showing some signs of a corrective rebound. However, the technical picture remains under pressure, and the fundamental backdrop is tilted towards a bearish outlook, limiting any potential rebound. While the upward momentum in crude oil has slowed and the US Dollar Index remains below the middle Bollinger Band, their weekly and monthly charts still suggest a bullish bias. Oil also continues to trade above its 200-day moving average. Overall, for gold, the outlook remains one of either continued bottoming consolidation or another leg lower. Intraday trading strategy leans towards short-term long positions on rebounds, followed by selling at higher levels.
Key Data to Monitor
Market focus today will be on several US economic releases, including June Housing Starts, June Building Permits, June Import Price Index, June Industrial Production, the preliminary July one-year inflation expectations, and the preliminary July University of Michigan Consumer Sentiment Index. Market expectations for this data are mixed, but based on the current price action, the market bias remains towards consolidation with a weaker tone. The trading approach will be to buy first, then sell.
Technical Analysis Perspective
On the weekly chart, gold prices have moved lower again this week, erasing the lower shadows from prior weeks and strengthening the bearish momentum. The price continues to trade below the 60-week moving average, suggesting a continued downward bias. The short-term target is a test of the $3900 level, with a further potential move towards $3700. This outlook remains intact until the price reclaims the 60-week moving average.
On the daily chart, yesterday's decline has caused the previously tightening Bollinger Bands to begin expanding downwards again, hinting at the potential for a new downward move. Resistance from the 5 and 10-day short-term moving averages will be watched for potential selling opportunities, with targets at the $3900 support level or lower.
Intraday Trading Levels
The following are preliminary support and resistance levels for intraday trading reference. Specific entry and exit points should be based on real-time account notifications.
Gold: Support is watched near $3955 or $3900; Resistance is eyed near $4020 or $4045.
Silver: Support is watched near $55.10 or $53.50; Resistance is eyed near $56.80 or $57.50.
Comments