Chapter 24  XAUUSD: Inflation Unexpectedly Drops, Gold Crosses Through Resistance (7.13)


In Thursday's (July 13th) Asian session, spot gold climbed narrowly higher, and it is currently trading at 1962. Overnight, gold prices rose more than 1%, once reached the resistance at 1960 as expected. The Overnight data showed that U.S. inflation cooled, boosting the market expectation on an earlier ending of the Fed's rate hike cycles, which in turn dragged the USD to plummet to a one-year-low at 100.5. Currently, the position of the gold price is facing resistance again, if it can be developed, gold may appreciate to a new high, but the resistance will become more considerable. Yesterday, investors were reminded of impactive news, and they should promote the position management. If the inflation data is good for gold, it will hit the resistance at 1960, and it was realized at the end. What will be next? It is important to keep greedy properly but not overly. Meanwhile, with the overhead resistance at 1970, whether gold can maintain strong will be determined by the jobless claims data to be released this evening. Now, investors should be careful despite a strong gold trend.

Data: U.S. annualized CPI (without seasonal adjustment) of June was 3%, lower than the expected value (3.1%) and the previous value (4%). Besides, the U.S. annualized core CPI (without seasonal adjustment) of June was 4.8%, lower than the expected value (5%) and the previous value (5.3%).

Today's focus: Investors need to pay attention to the U.S. June PPI data and the U.S. initial jobless claims changes, as well as the minutes of the June monetary policy meeting of the European Central Bank, and the San Francisco Fed President Daly and other Federal Reserve officials' speeches.

Technical Analysis

Daily chart: Gold has appreciated for 2 trading days, and investors should see if gold can extend its strength. Technically, gold is on a strong trend, the 5-day SMA crosses above the 10-day SMA while all SMAs are growing upward and lining with a bullish trend, while gold has broken through the previous resistance at 1950. Nonetheless, there is an oversold signal and gold faces the resistance of the 60-day SMA above. Despite gold may cross above the 60-day SMA under the support of the market's positive sentiment, or even test 1980, technically the retracement needs to be released. Therefore, it is recommended to keep a positive expectation but not chase the current upward trend. Furthermore, whether the USDX can stop declining and the technical suppression to gold may cause a retracement demand. Today, try to focus on the resistance of the 60-day SMA (1965-1970) and check the support between 1945-1950.

Trading recommendations for today: Despite today's strong expectations, the short-term upward space for gold is limited. Thus, investors should buy lows and sell highs in the range. For aggressive investors, try to go long shortly at 1945 and set the stop-loss below 1940. Meanwhile, investors must refer to 1965 as the primary target and move the stop-loss to breakeven, and take profits at 1970. If gold gets weaker after appreciating to 1965-1970, investors should go short at 1965, and set the stop-loss at 1970. Additionally, investors shall take profits at 1950.

XAUUSD: Inflation Unexpectedly Drops, Gold Crosses Through Resistance (7.13)-Pic no.1

Trading Recommendations

Trading direction: Short

Entry price: 1968

Target price: 1950

Stop loss: 1973

Support: 1950.000/1938.000

Resistance: 1970.000/1980.000

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