Gold prices turned lower as expected after carving out a bearish Evening Star candlestick pattern, but a break of near-term support in the 1797.63-1808.40 zone remains elusive for now. A breach confirmed on a daily closing basis may expose the 1755.50-64.73 area next.
Looking topside, a dense resistance block sits just above the latest swing top and extends upward to 1870.75. If prices manage to establish a foothold above this barrier once more, a drive through the 1900/oz figure to challenge June’s high at 1916.53 may be in the cards.
· Choppy Session Continues for Gold – Investor’s Eyes on $1,811 Resistance
The precious metal, GOLD, is trading with a neutral bias at the 1,805 level, facing immediate resistance at 1,811. During the Asian session, gold mainly traded with a bullish bias, on the back of slight weakness in the US dollar.
Gold traders seem hesitant as the market awaits the US Federal Reserve’s policy decision, which is due to be released by the Federal Open Market Committee (FOMC) at the end of the week.
Physical Demand for Gold Drops Amid Volatile Gold Prices
Speaking about the physical demand for gold in India, there was an inconsistent major gold hub throughout the past week. Volatility in gold prices discouraged buyers, driving merchants to offer discounts at the highest levels in nearly a month, to support purchases.
Gold – XAU/USD – Technical Outlook
On Monday, the precious metal, gold, is trading sideways above the 1,795 level, and it could bounce off until the next resistance level of 1,832. On the daily timeframe, the 50 EMA is extending resistance at 1,810 and 1,832. A bullish crossover at 1,832 could lead the gold price towards the 1,844 level.
Alternatively, violation of the 1,795 support level could extend the selling trend until levels of 1,776 and 1,753. The MACD and RSI are staying above and below the mid-levels, indicating indecision among investors. Let’s consider taking a buying position over 1,811 and selling below the same level today.
The US dollar notched a second week of gains following a number of volatile days pertaining to the ebb and flow in risk appetite ahead of the Fed for the week ahead.
The focus is on US data and inflation in the main.
The Federal Reserve this week will be expected to indicate that tapering should emerge in 4Q this year, with the possibility of a first hike coming in 4Q22.
If 2Q21 GDP growth – expected at 8-9% quarter-on-quarter annualised – plus also June readings for personal consumption and the PCE deflator, all arrive strong, the US dollar should continue to prosper within the US dollar smile theory. Subsequently, this could weigh on the commodity complex for the weeks ahead.
Australia's most populous state reported a rise in new COVID-19 cases on Monday despite a weeks-long stay-at-home order, while police vowed to crack down on any repeat of a wild anti-lockdown protest at the weekend.
New South Wales, which has had more than 5 million people in Sydney city under lockdown for a month, reported 145 new cases of the virus, from 141 a day earlier, as it struggles to contain an outbreak of the highly contagious Delta variant.
· Support for Japan's PM Suga slides as COVID shadows Tokyo Games
Voter support for Suga slid nine points to 34%, its lowest since he took office last September, a July 23-25 Nikkei business daily survey showed on Monday. The Games, postponed last year by the pandemic, opened on Friday.
· BOJ appoints PhD economist to head policy planning division
The Bank of Japan on Monday appointed one of its most prominent economists to head a division drafting monetary policy, as the fallout from the coronavirus pandemic complicates policymakers’ efforts to predict the economic outlook.
· With eye on China, Pentagon chief heads to Southeast Asia
U.S. Defense Secretary Lloyd Austin will become the first member of President Joe Biden's cabinet to visit Southeast Asia this week, seeking to emphasize the importance Washington places on fortifying ties in the region while pushing back against China.
· China tightens grips on local government hidden debt
· Action on climate change can provide a shot in the arm for the global economy, economist says
Ramping up investment in policies and technologies to tackle climate change could play a significant role in the global economy’s recovery from the coronavirus pandemic.
In a recent note, Charles Dumas, chief economist at U.K.-based investment research firm TS Lombard, said that action on climate change is often criticized as moving too slowly. However, with governments increasing spending to aid their post-Covid economies, they may start catching up.
A key tenet of this is the ever-decreasing cost of electricity per megawatt hour, according to figures from TS Lombard, with costs of solar, offshore and onshore wind dropping over the last 10 years, while gas and coal have remained largely the same.
· Dollar holds near multi-month highs as Fed meeting in focus
The U.S. dollar hovered near its strongest level since early April against the euro on Monday, as financial markets looked ahead to the Federal Open Market Committee (FOMC) meeting this week for clues on the timing of stimulus tapering.
The greenback was also close to a 12-day high on the safe-haven yen as record-high U.S. equity markets buoyed risk sentiment.
The dollar index, which measures the currency against six major peers, stood at 92.920 at the start of the week, off from last week’s 3-1/2-month high of 93.194. It was still up about 3.8% from a recent low on May 25 as an improving U.S. economy bolstered the outlook for the Federal Reserve to start paring asset purchases as early as this year.
Commonwealth Bank of Australia projects the dollar can continue to strengthen this week on the possibility of the Fed moving a step closer to tapering at the conclusion of its two-day policy meeting on Wednesday.
“We expect the FOMC to drop ‘substantial’ from ‘substantial further progress’” in its guidance on the necessary conditions for the labor market before removing monetary support, CBA strategist Joseph Capurso wrote in a client note.
“Removing ‘substantial’ will signal the FOMC believes it will soon be appropriate to taper asset purchases,” setting up a possible announcement of a taper in September, he said.
The risk to such an outlook is the rise in Covid-19 cases in the United States, coming after the Fed at its last meeting on June 16 dropped a reference to the coronavirus as a drag on the economy.
The dollar index eked out a 0.2% gain last week, benefiting from a safe-haven bid on fears a surge in infections of the fast-spreading delta variant could derail the global recovery, but paring those gains as strong U.S. earnings lifted stocks.
The dollar last traded little changed from Friday at $1.17655 per euro, near the high from last week of $1.1752, a level not seen since April 5.
It bought 110.56 yen approaching the peak of 110.58 from Friday, which was the highest since July 14.
· Bitcoin leaps 12% to test recent peaks, ether hits 3-week high
Cryptocurrencies popped to the top of recent ranges on Monday as short sellers bailed out in the wake of a strong week and while traders hoped a handful of positive comments from influential investors might signal a turnaround in fragile sentiment.
· Oil prices little changed as coronavirus and floods threaten demand*
Oil prices were little changed on Monday as investors balanced concerns about fuel demand from the spread of Covid-19 variants and floods in China against expectations of tight supplies through the rest of the year.
Brent crude futures for September fell 3 cents to $74.07 a barrel by 0153 GMT while U.S. Texas Intermediate crude was at $71.99 a barrel, down 8 cents.
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