Gold is facing difficulty in maintaining a bearish trend after breaking a two-week upward trend and experiencing a recent decline. The perspective of @nehcap is that there will likely be more downward movement.

…
This is a premium post.
[s2If !current_user_can(access_s2member_level4)]Please register for FREE REGISTER to read full post below containing analysis. In case of any error or you think you are not able to read the full post below, please email us at support#nehcap.com [lwa][/s2If] [s2If current_user_can(access_s2member_level1)]

• Gold Price struggles to keep bears on board after snapping two-week uptrend, retreating of late.

The pair currently trades last at 1957.69.

The previous day high was 1967.96 while the previous day low was 1953.34. The daily 38.2% Fib levels comes at 1958.92, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1962.38, expected to provide resistance.

Gold Price (XAU/USD) remains depressed after posting the first weekly loss in three, bouncing off short-term key support confluence to around $1,950. That said, the XAU/USD begins the trading week on a dicey floor amid the US holiday on Monday, as well as a light calendar elsewhere. However, hoeps of the Federal Reserve’s (Fed) July rate hike joins mixed concerns about China and the US to weigh on the Gold Price, despite downbeat US Dollar. That said, Fed Chair Jerome Powell’s bi-annual Testimony and the preliminary readings of the US, UK and Japan PMIs for July will be the key to watch for clear directions during the week.

Gold Price fails to cheer the downbeat US Dollar performance in the last week as mixed US data joined blurry concerns about the US and China economics.

US Dollar Index (DXY) dropped for the third consecutive week to the lowest level since early May, pressured near 102.30 at the latest.

That said, the US central bank kept the benchmark interest rate unchanged at 5.0-5.25%, matching market expectations of pausing the multi-month-old hawkish cycle after 10 consecutive rate increases. However, the upbeat FOMC Economic Projections and Federal Reserve (Fed) Chairman Jerome Powell’s speech backed the hawkish Fed bias surrounding the July meeting. Even so, mixed US data and comparatively more hawkish moves of the European Central Bank (ECB) weighed on the US Dollar.

On Friday, the preliminary readings of the University of Michigan (UoM) Consumer Sentiment Index (CSI) for June improved to 63.9 from 59.2 prior and market expectations of 60.0. However, the year-ahead inflation expectations receded for the second consecutive month to the lowest since March 2021, falling to 3.3% in June from 4.2% in May, per the UoM report, while the five-year forecasts appear little changed to 3.0% versus 3.1% anticipated and prior.

Previously, US Retail Sales and inflation data weren’t too impressive, which in turn flagged fears of the US economic performance and weighed on the Gold Price.

Additioally, Fed policymakers have been hawkish of late and exerted downside pressure on the XAU/USD. “Inflation in the US is well above target and the labor market remains very tight,” as per the latest US Federal Reserve (Fed) Monetary Policy Report to the US Congress, published Friday. The report also mentioned, per Reuters, “Outlook for funds rate is subject to considerable uncertainty.” On the same line, “Raising rates further could create the risk of a more significant slowdown in the economy,” signaled Thomas Barkin, President of the Federal Reserve Bank of Richmond on Friday that, per Reuters. The policymaker, however, also added that the Fed can do comfortable more to slow resilient US economy, which in turn triggered a jump in the 2-year Treasury bond yields to 4.75% and helped the US Dollar to get off the lows.

Furthermore, “US economy is still ‘ripping along’,”said Federal Reserve Governor Christopher Waller on Friday while adding that everything seems to be calm in the US banking system, as reported by Reuters.

As per the South China Morning Post (SCMP), the Council considered a batch of macroeconomic policies designed to expand “effective demand”, strengthen the real economy and defuse risks in key areas. However, the markets appear to have lost interest in announcement from China as the last week’s rate cuts have already signaled such measures but were mostly failed to inspire the markets much. On the same line, US Secretary of State and Chinese foreign minister on Sunday held what both called candid and constructive talks on their differences from Taiwan to trade but seemed to agree on little beyond keeping the conversation going with an eventual meeting in Washington, per Reuters.

Elsewhere, Russia rules out scope of extending Ukraine grain deal and flags more risk-off move, which in turn can weigh on the XAU/USD.

Amid these plays, Wall Street closed on the positive side, yields eased but the commodities traded mixed while the US Dollar dropped.

Moving on, Monday’s inaction, due to the US holiday, may allow traders to reassess the previous week’s mixed moves ahead of Federal Reserve (Fed) Chair Powell’s Testimony, which will be crucial for confirming July rate hike and may weigh on the Gold Price. Following that, Friday’s US Purchasing Manager Indexes (PMIs) for June will be eyed for clear directions.

Also read: Gold, the Chart of the Week: XAU/USD is coiled and breakout eyed

Gold Price portrays bearish consolidation above a convergence of the 100-DMA and 50% Fibonacci retracement of late February to early May upside, around $1,940 by the press time.

That said, the Moving Average Convergence and Divergence (MACD) indicator regains bullish momentum but the Relative Strength Index (RSI) line, placed at 14, steadies near the 50.0 level, suggesting a continuation of the bearish grind.

With this, the XAU/USD is likely to remain sidelined unless breaking the $1,940 support confluence.

Following that, a quick fall towards the 61.8% Fibonacci retracement, also known as the golden ratio, around $1,910, can’t be ruled out. However, the $1,900 round figure may offer breathing space to the XAU/USD bears afterward.

Meanwhile, the Gold Price recovery needs validation from the 50-DMA hurdle of around $1,985 by the press time.

Even if the XAU/USD crosses the $1,985 resistance, the $2,000 psychological magnet may check the further upside before directing the Gold Price toward a two-month-old horizontal resistance area of around $2,050 and then to the record high marked in May near $2,080.

Trend: Further downside expected

Technical Levels: Supports and Resistances

XAUUSD currently trading at 1957.18 at the time of writing. Pair opened at 1957.98 and is trading with a change of -0.04% % .

The pair is trading above its 20 Daily moving average @ 1956.8, below its 50 Daily moving average @ 1985.33 , above its 100 Daily moving average @ 1942.08 and above its 200 Daily moving average @ 1847.63

The previous day high was 1967.96 while the previous day low was 1953.34. The daily 38.2% Fib levels comes at 1958.92, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1962.38, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1951.56, 1945.14, 1936.94
• Pivot resistance is noted at 1966.18, 1974.38, 1980.8

[/s2If]
Nehcap Expert Advisor
The NEHCAP MT4 EA is high quality professional trading system geared to generate returns without using GRID or martingales. Each trade has strict risk per trade parameter. The pairs under management include EURUSD, GBPUSD, AUDCAD, AUDNZD,GBPAUD, EURAUD, EURCAD, CHFJPY and many more.
The system is trading live: LIVE ACCOUNT TRACKING
You can run it free. Apply for a free trial and track our account. Buy the system or use profit share mechanism to generate returns on your MT4.
Join Our Telegram Group