Chapter 6  XAUUSD: Weakening Manufacturing Data and Renewed Recession Expectations(7.4)


During the Asian session on Tuesday (July 4), spot gold traded in a narrow range and is currently trading around 1924. The U.S. ISM manufacturing index in June, released last night, unexpectedly hit a new low of more than three years, falling into contraction for eight consecutive months and rekindling market concerns about the U.S. economy falling into recession. Gold and silver received some support. However, the Federal Reserve's probability of raising interest rates in July is still high, U.S. Treasury yields remain strong, and the current rate hike time is approaching. Gold bulls will still have concerns, and gold prices are expected to be in unstable trading in the short term. The U.S. market is closed today, the market is not expected to be large, and gold prices may maintain a narrow range of fluctuation.

As for the data, dragged down by production, employment and input prices, the U.S. ISM manufacturing index in June was only 46, falling into contraction for eight consecutive months and hitting a new low since May 2020, below the 50 watershed between expansion and contraction since 2008-2009 for the longest time. The final value of the U.S. Markit manufacturing PMI in June is 46.3, with the expected value of 46.3, the initial value of 46.3 and the final value in May of 48.4. The final value of the Eurozone manufacturing PMI in June is 43.4, with the expected and the initial value of 43.6. In the same month, the final value of German manufacturing PMI is 40.6, a new low since May 2020; the final value of French manufacturing PMI is 46; the final value of British manufacturing PMI is 46.5, a new low since December last year.

The U.S. is closed for Independence Day today. Investors need to focus on key data: Germany's May quarterly adjusted trade account, Germany's May quarterly adjusted monthly rate of exports, Germany's May quarterly adjusted monthly rate of imports and Canada's national economic confidence index as of June 30.

Technical Analysis

In the daily chart, gold prices yesterday first oscillated lower under the pressure of 1920, below as expected also retraced to 1910, and during the evening session, gold prices rebound in 1910. In this wave, gold prices rebounded above the high to 1930, then fell under pressure, and finally recovered near 1920. The daily chart is closed at the white star body with the upper and lower shadow candlesticks. The MACD indicator is still near the oversold area with the trend of forming a golden cross, gold prices are on the 5-day and 10-day moving averages, and the market is bullish. In the short term, you can focus on the above resistance of 1935 in the 20-day moving averages and the below support of 1915 in the 5-day moving averages.

As for intraday trading, yesterday we also stressed to go long as the major.  The market positions are all also in the stop profit. Today you can try to buy low and sell high. In intraday trading, you can wait for the support of a 5-day moving average of 1915 and then go long. The stop loss is set at 1908, the above take profit is related to the resistance of 1930. If the market is quickly up near 1930, you can also try to a test short in the short term. The stop loss is set at 1935. The take profit is uniformly set at 1915.

XAUUSD: Weakening Manufacturing Data and Renewed Recession Expectations(7.4)-Pic no.1

Trading Recommendations

Trading direction: Long

Entry price: 1913

Target price: 1930

Stop loss: 1907

Support: 1910.000, 1900.000

Resistance: 1930.000, 1935.000

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