Chapter 8  XAUUSD: Keen an Eye on the Meeting Minutes and See If the Tightening Continues(7.05)


Spot gold was narrowly oscillating during the Asian session on Wednesday (July 5th) and it is currently trading around 1925. Yesterday, due to insufficient data for holiday, the impact on the USD, gold, foreign exchange, and crude oil movements are small. Besides, gold prices moved under the oscillation range between 1920-1930, the amplitude was about 10 USD, but the trading space is still limited. Meanwhile, gold surged straight forward from 1920 to 1930 in yesterday's Asian session but dropped back down to 1925 with oscillations. Investors need to pay attention to the next Fed meeting minutes and Nonfarm Payrolls data. Currently, the rise in U.S. borrowing costs has significantly curbed demand, and price pressures have been greatly reduced, but the pressure on employment and the economy is accumulating. In addition, PMI has continued to decline beyond expectations, and Fed officials stay hawkish. Nevertheless, investors are skeptical about whether the Fed will go further tightening, which may support gold prices.

News: Australian Fed suspended interest rate hikes and kept the benchmark rate at 4.1%, remaining at a high level since 2012, in line with market expectations. The Australian Fed said it still expects the economy to grow and inflation to return to the target range of 2%-3%, and it will resolutely recover inflation to the target level, which may need further tightening of monetary policy. Additionally, OECD reveals that the inflation of G-7 fell to 4.6% in May from 5.4% in April, reaching its lowest level since September 2021, while the U.K. is the only G-7 country where inflation is still rising.

Investors must pay attention to the Fed's meeting minutes of June, which will be released at the Thursday midnight. Today, the monthly rate of U.S. factory orders in May, the revised monthly rate of U.S. durable goods orders in May, and the PPI, services, and composite PMI data in the eurozone are worth investors' attention.

Technical Analysis

Daily chart: Gold has been rising for 4 consecutive days, showing a positive trend with oscillations. Now, MACD stays near the oversold area and forms a golden cross, while gold prices stand firmly above the 5-day and 10-day SMAs. Moreover, the 5-day SMA crosses above the 10-day SMA, and gold may have turned bullish shortly. Now, gold oscillates between the 5-day and 10-day SMAs, while the resistance of the 20-day SMA (1933) and the support of the 5-day SMA (1919) should be considered. Basically, it is hard for gold to appreciate unliterally before jumping above 1933, and it may stick to the bottom now. If gold successfully rises above 1933, it may reach 1940-1950. But if gold plunges below 1919, the center of the pattern will drop, and gold will turn weaker to test the previous lows (1910 and 1902). Since there are enormous data in the second half of this week, investors must be careful of significant movement, and don't chase the ups and downs.  

Trading recommendations for today: The U.S. session closed yesterday and there was little space to trade, which meets the market expectations. Gold rebounded to 1930, suggesting few profits for short-term bears. But since the range is limited, the trading space is insufficient, while today's trend may be still oscillating narrowly. Thus, investors should wait for the data and the Fed's meeting minutes. Also, investors can go long after the support of the 5-day SMA (1919) gets stable, set the stop-loss order at 1915 and take profits at the resistance near 1933. If gold is boosted to 1933 rapidly, investors can go short in the near term and set the stop-loss order at 1938. To take profit, investors can refer to 1919.

XAUUSD: Keen an Eye on the Meeting Minutes and See If the Tightening Continues(7.05)-Pic no.1

Trading Recommendations

Trading direction: Short

Entry price: 1933

Target price: 1919

Stop loss: 1938

Support: 1919.000/1910.000

Resistance: 1933.000/1940.000

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