The previous trading session on Monday, July 20th, saw international gold open lower, fluctuate, and close down. Escalating geopolitical tensions over the weekend initially boosted oil prices at the open, pressuring gold lower. Subsequent support buying emerged. Reports that a mediator proposed a 10-day US-Iran ceasefire to seek a return to the implementation of a memorandum of understanding, along with the resumption of Yemeni oil exports, weighed on oil prices and boosted gold. However, as geopolitical tensions persisted, supporting a recovery in oil prices, gold faced renewed selling pressure, closing the day with mixed results.
This leaves the price action still under pressure, with a weak short-term outlook. Support is eyed around $3,930 or $3,660, where a potential staged rebound could be sought.
In terms of specific price action, gold opened the week lower at $4,003.21 per ounce. Intraday trading was characterized by frequent oscillations. The session low of $3,982.65 was recorded around 8 AM, while the European session tail saw a high of $4,040.27. The metal ultimately closed at $4,007.48. Compared to last week's close of $4,013.22, this represents a decline of 57.62 points, or $5.74, a drop of 0.14%.
Looking ahead to Tuesday, July 21st, international gold opened with a weaker bias. Pressure stems from the pullback from yesterday's high and early-session moving average resistance. Additionally, the US Dollar Index maintains a relatively strong rebound momentum from recent sessions, applying further downward pressure. In the short term, gold prices are expected to remain under pressure and continue their weak adjustment.
On the fundamental front, while there is hope for renewed US-Iran talks, the maritime blockade of Saudi Arabia by Yemen's Houthi forces continues to support oil price bulls. This makes it difficult for inflation expectations to decline and sustains the prospect of Federal Reserve interest rate hikes, thereby limiting gold's rebound potential. Consequently, gold's price movement is still expected to be dominated by range-bound fluctuations. Traders should focus on intraday short-term resistance and support levels for positioning.
Technical Analysis Overview
On the monthly chart, gold formed a solid bearish candle in June, indicating sustained selling pressure. This suggests the potential for a further decline in July towards the support of the Bollinger Band middle line around $3,820, or even lower. Although the overall decline has currently stalled, the price remains under the downward pressure from June's drop and has not yet reclaimed the position above the ascending trendline. Therefore, until June's losses are recovered, there remains a risk expectation for another turn lower to test lows. The outlook leans towards a potential sideways consolidation for several months within a broad range of $4,500 to $3,600, before resuming an upward trajectory.
On the weekly chart, gold has been consolidating over recent weeks, failing to break through the resistance of the 60-week moving average. The trend remains under pressure. Until a sustained break above this resistance is achieved, a weak consolidation bias is maintained. Downside support to watch is around the trendline near $3,930, or the 100-week moving average near $3,650. A rebound from these levels could be anticipated for a more substantial bullish move.
On the daily chart, gold has been developing within a recent oscillating downtrend. Although the decline has currently paused, the price remains below the middle Bollinger Band, and the bands themselves are inclined to extend downwards, indicating a persistently weak outlook. Furthermore, the bearish alignment of moving averages like the 60-day and 100-day reinforces the negative bias, suggesting further room for adjustment. Intraday, short-term trading strategies based on support and resistance remain appropriate.
Key Intraday Trading Levels
The following are preliminary reference points for intraday trading ideas. Specific entry and exit points should be based on real-time account notifications.
Gold: Watch for support around $3,980 or $3,940; resistance is seen around $4,020 or $4,050.
Silver: Watch for support around $55.70 or $55.10; resistance is seen around $57.30 or $58.10.
Comments