On Tuesday, July 21st, during the Asian trading session, the spot price of gold experienced a sudden and sharp rise. The price is currently hovering around $4,055 per ounce, having surged nearly $50 on the day. Analysis attributes the gold price increase to investors buying on dips. Concurrently, traders continue to closely monitor developments in the Middle East to gauge the impact of rising energy prices on inflation.
Current interest rate market pricing indicates that traders still expect the Federal Reserve to keep rates unchanged at its July meeting. However, the September meeting remains uncertain, with the market still pricing in a significant risk of a 25-basis-point hike. For gold, this means safe-haven demand provides support, but the prevailing "higher for longer" interest rate narrative continues to cap the upside.
Technical Analysis of Gold's Price Action
From a daily chart perspective, the price has broken above the 5-day and 10-day moving averages, showing signs of a further short-term rebound. The next target is the resistance area around $4,060, corresponding to the 20-day moving average. The MACD indicator has turned into a bullish crossover and is expanding upwards, although it remains within the bearish zone overall, suggesting the market is in a short-term consolidation phase.
On the 4-hour chart, the MACD's bullish crossover is followed by expanding red bars, indicating a slight strengthening of short-term bullish momentum, though this cannot yet be defined as the formation of a full bullish trend. The RSI is operating around 63, not yet entering a clearly overbought region, which suggests some bullish power remains. In the short term, the gold price may continue to test higher levels. However, with indicators at elevated levels, a pullback could occur at any time. Overall, the recommended approach is to treat the market as being in a wide-ranging oscillation.
Gold Trading Strategy
Short Strategy: Consider short positions in the range of $4,063 to $4,065, with a stop-loss at $4,083 and a target near $4,032.
Long Strategy: Consider long positions in the range of $4,027 to $4,025, with a stop-loss at $4,003 and a target near $4,081.
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