Chapter 49  XAUUSD: Nothing Unexpected at the Meeting, Is It Not Far from the Rate Cut?(7.27)


During the Asian session on Thursday (June 27), spot gold fluctuated to the upside and is currently trading around 1980. The July FOMC meeting raised rates by 25 bps, which fully met market expectations. Powell did not give a hawkish surprise at the press conference as well. In a word, core inflation will remain high, and whether to raise interest rates in September depends on the data. There will be no more rate cuts this year, but it is not ruled out multiple rate cuts next year. For the market, perhaps investors are more concerned about the end of the rate hike and next year's rate cut. At the same time, the dollar index also continued to fall, which provided some support to gold prices. However, considering that high-interest rates will remain for a long time, the smooth upward movement of gold prices still needs the support of the rate cuts. Otherwise, it will only maintain a wide range of oscillations.

News: The Fed raised rates by 25 bps as scheduled last night. Powell claimed that the US inflation has eased to some extent, but there is still a long way to go to bring inflation back to 2%. The labor market is still very tight. If supported by the data, another rate hike will be seen in September. He also stressed that there will be no rate cuts this year, but several rate cuts may be implemented next year.

Data: US new home sales dropped for the first time in four months, with prices down 4% YoY, but fewer builders offered incentives. US new home sales fell 2.5% MoM in June, which is the first decline since February, and rose 23.8% YoY, indicating that it is still in a relatively strong position. The median price of new homes in June was $415,400, down 4% YoY. By comparison, the median Existing Home price in June was $410,200, which is the second highest on record.

Data for investors to focus on today include the US jobless claims for the week ended July 22, the core PCE price index, the preliminary US durable goods orders for June, the preliminary annualized quarterly rate of real GDP in the US for the second quarter, the preliminary monthly rate of wholesale inventories in the US for June, and the monthly rate of the US existing home sales index after the quarterly adjustment in June. Major events to watch include the ECB's interest rate decision and the monetary policy press conference with Christine Lagarde, the ECB President.

Technical Analysis

Trading at the daily timeframe, the price generally remained in a state of high oscillation last night, and the market repeatedly grabbed and pulled in the evening session. Before the Fed's interest rate decision, we also emphasized to keep looking at the fluctuation under the suppression of 1975, and this is also the case. After several failed attempts to break through 1975, gold retreated twice. The first pullback was as low as 1963, while the second was in 1965, and both short positions were comfortable. Gold prices have been in the MA5, MA10 oscillating operation, and the technical infrastructure of the daily chart for another bullish is relatively solid. At the same time, the daily chart appeared three consecutive white bodies above 1952, shifting the weak shock in the early stage into the shock strong. Investors should still major in going long at lows, with attention to the resistance above in the 1988-1990 area. If the price above encounters downside resistance, we need to focus on a local M-shaped double-top pattern that may occur in the short term. While the price below will test the 1966 support, and the support of 1952 will be tested later. The intraday support that should pay attention to today is the 1970 line. Although it is bullish, the actual trading is by no means suitable for investors to chase up. As the price lacks the impetus of big stimulus and the sustainability is weak, investors need to wait steadily for the pullback, and mainly bullish.

Investors are advised to buy low and sell high in the range. If the price retreats to the 1970-1973 zone, you can go long with a small position. The stop loss is set at the 1966 line. Investors can take profit step-by-step, we should first focus on the 1983 line, where you can reduce production and move your stop loss to break even. Then, investors are able to focus on the 1988 line. If the price encounters resistance and lacks strength after rising to the 1986-1988 line, you can also test short with a small position. However, traders should make sure to trade with extremely small positions and not make multiple trades or increase positions. The stop loss is at 1990, and the target to take profit uniformly focuses on the 1973-1975 area.

XAUUSD: Nothing Unexpected at the Meeting, Is It Not Far from the Rate Cut?(7.27)-Pic no.1

Trading Recommendations

Trading Direction: Long

Entry Price: 1970

Target Price: 1988

Stop Loss: 1966

Support: 1966.000/1952.000

Resistance: 1983.000/1988.000

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