On July 7th, our previous analysis noted that disappointing U.S. employment data, indicating a tangible cooling in the labor market, had led to a reduction in market bets for Federal Reserve rate hikes, providing support for a gold price rebound. Additionally, short-term technical indicators suggested gold still had potential for another upward move. However, following a consecutive rally, the metal exhibited a need for consolidation. Consequently, our operational advice was to watch for support at $4,136, followed by $4,100, with resistance eyed at $4,200. A sustained break above this level would shift focus towards $4,300.
Looking at the subsequent price action, gold extended its Asian session decline during Monday's European trading, dipping lower. After the U.S. market open, it hit a daily low of $4,128 before stabilizing and rebounding, encountering resistance at $4,167. On Tuesday's open, gold made a minor attempt to push higher, meeting resistance at $4,168, and subsequently fell back into a consolidative decline, finding a base at $4,116. It is currently trading around $4,136. Overall, gold is maintaining a range-bound movement between $4,100 and $4,200, undergoing a period of adjustment after its rebound from recent lows met selling pressure.
Wolfinance's star analyst suggests that the initial rebound from six-month lows was fueled by the weak U.S. non-farm payrolls report signaling labor market cooling, easing Middle East tensions, falling oil prices, and the Fed Chair's comments on diminished inflation risks, which collectively dampened expectations for further Fed tightening. However, after reaching a one-week high, gold's advance stalled, entering a phase of consolidation. This is primarily attributed to the market's significantly increased expectations for a Fed rate hike this year following the central bank's recent decision to hold rates steady but adopt a more hawkish policy tilt. This shift has underpinned a sustained U.S. dollar rally. Although the dollar's ascent has recently paused, it remains elevated, and its strength continues to cap gold's upside. Furthermore, with the Federal Reserve meeting minutes approaching, and considering the Fed's hawkish pivot, market participants are adopting a more cautious stance.
On the daily chart, gold is consolidating after encountering resistance near its recent one-week peak. Key support levels to monitor are the psychological $4,100 mark, followed by the 10-day simple moving average around $4,070. Immediate resistance is seen at the daily Bollinger Band middle line near $4,142, a level gold has tested and failed to breach during Asian and European sessions. A decisive break above this could target Tuesday's intraday high of $4,168—a level that also capped rallies on Monday—and subsequently the $4,200 level. While the 5-day SMA and MACD indicator show bullish crossovers, the KDJ and RSI indicators are turning lower from bullish formations. This technical picture suggests gold retains potential for a rebound, but faces near-term consolidation pressure following its failed breakout attempt.
Intraday Gold Outlook: With caution prevailing ahead of the Fed minutes release, gold is consolidating within a range after its rebound met resistance. A range-trading strategy is advised. Support is viewed at $4,100 and $4,070, while resistance focuses on the $4,142 level. A sustained move above this resistance could open the path towards $4,168 and $4,200.
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