On July 21st, our previous analysis noted that while cooling U.S. inflation data provided a temporary reprieve for gold's decline, rising oil prices fueled by Middle East tensions and a hawkish Federal Reserve stance continued to pressure the precious metal. Consequently, we advised monitoring resistance levels at $4021 and $4060, with support levels at $3959, $3943, and $3900.
Following that, the price action on Monday saw gold dip slightly at the Asian session open, finding a floor at $3982 before rebounding in a choppy manner. The European session pushed prices to a daily high of $4040, where resistance emerged. Gold then retreated, finding support around $3998 during the U.S. session before consolidating just above the $4000 psychological level. It is currently trading near $4009. Overall, while the downward momentum has eased, the rebound is clearly capped, leaving gold in a low-level consolidation pattern.
Market analysis suggests gold has stabilized and is oscillating above its six-month low, with immediate downward pressure alleviated primarily due to the cooler-than-expected June U.S. inflation figures, which reduced market bets on further Fed rate hikes. The U.S. dollar remains strong but is consolidating at elevated levels without further gains. However, gold has not staged a significant rebound, instead remaining in a low-range consolidation. This is largely because the June inflation cooldown was partly driven by falling energy prices. With recent escalations in tensions between the U.S. and Iran pushing oil prices to a one-month high, there is a risk of renewed upward pressure on CPI and PPI data. Furthermore, the Fed maintains a hawkish bias, with its Chair indicating that the June data does not signify the inflation fight is over. The expectation that the Fed will maintain high interest rates for an extended period continues to weigh on gold prices. A brief bounce in gold on Monday was attributed to Iran hinting that diplomatic channels were not entirely closed, offering minor support.
On the daily chart, gold is stabilizing above the six-month low but remains under pressure within a consolidation range. Key support levels to watch are near Monday's low around $3980, followed by last week's low near $3960, and the six-month low at $3943, which also aligns with the lower Bollinger Band. On the upside, resistance can be found near the $4020 level where prices consolidated during Monday's U.S. session, followed by Monday's high of $4040, and the daily Bollinger Band midline around $4060. Technical indicators present a mixed but generally weak picture: the 5-day moving average is in a bearish crossover pointing downwards, the MACD shows a slight bullish crossover, the KDJ indicates a bearish crossover turning upwards, and the RSI lines are converging and slightly bearish, all situated in weak territory. The short-term technical setup shows clear selling pressure, with bears retaining the advantage.
Intraday outlook for gold: Renewed U.S.-Iran tensions pushing oil prices higher, coupled with the Fed's hawkish stance and the market's expectation for a prolonged period of high interest rates, continue to suppress gold prices. With gold currently consolidating at lower levels, a range-trading approach is advised for now, with positions to be adjusted should a clear breakout occur. Upside resistance is eyed at $4020, followed by $4040 and $4060. Downside support is seen at $3980, followed by $3960 and $3943.
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