Gold Forecast: XAU/USD is punished by the strong US dollar, trading around $1,735

  • The precious metals complex remains on the defensive, with gold hitting a two-month low and silver hitting a two-year low.
  • Risk aversion dominates Tuesday’s session as investors prepare for June’s US CPI report.
  • Analysts at Commerzbank commented that the strength of the US dollar and exits from gold ETFs keep XAUUSD heavy.
  • Gold Price Forecast (XAU/USD): Heading Down and Could Test $1,700; otherwise, a correction to $1,750 is anticipated.

Gold (XAU/USD) it fell during the American session on Tuesday due to risk aversion, courtesy of the resurgence of the coronavirus in China, the EU energy crisis and recession fears. This tends to lift the price of the yellow metal, although safe-haven flows are heading towards the greenback and US Treasuries, as US bond yields are falling across the board.

XAUUSD is trading around $1,731 a troy ounce after trading between the high and low of the day during the Asian session. The yellow metal made its low around $1,722, followed by a rally to the daily high near $1,744, and then the price of gold remained in a range within $1,728-1,740 for the rest of the day .

Sentiment remains negative as traders brace for Wednesday’s US inflation report. A day later, prices paid by producers would shed some light on raw material and commodity prices and could be a harbinger of what could happen during the second quarter earnings season. According to press secretary Jean-Pierre, the White House said the new CPI would be high.

Also fueling investor concerns, the resurgence of Covid-19 in China saw Wugang shut down for three days due to a Covid case, while Shanghai continues to conduct massive city-wide testing.

On the other hand, analysts at Commerzbank said that the firm US dollar is not the only reason behind lower gold prices, but also the continued strong outflows from ETFs.

“Gold ETFs tracked by Bloomberg posted outflows of 29 tons last week, the steepest in eight weeks and the fourth week in a row (with momentum growing). Speculative financial investors have also pulled more out of gold lately. Statistics show from the CFTC, its net long positions are at their lowest level in more than three years,” the Commerzbank analysts wrote.

What must be considered

The consumer price index and the Beige Book will be released on Wednesday, and the PPI and initial jobless claims on Thursday. On Friday, the University of Michigan Consumer Sentiment could be back in the spotlight ahead of the Fed’s July meeting.

Gold Price Forecast (XAUUSD): Technical Outlook

XAUUSD has a bearish bias despite remaining choppy trading conditions as sellers are unable to challenge the $1,700 figure. Gold traders should note that oscillators are showing oversold readings, indicating selling pressure is easing, although the slope of the RSI is still pointing lower, opening the door for a challenge at $1,700.

Therefore, XAUUSD breaking below the 29 Sep 2021 low of $1,721.71 would expose the $1,700 figure. To the upside, the first resistance for XAUUSD would be $1,750. A breakout of the latter would expose the 20-day EMA around $1,800.

Technical levels

XAU/USD

Panorama
Last Price Today 1733.13
Today’s Daily Change -0.93
Today’s Daily Change % -0.05
Today’s Daily Opening 1734.06
Trends
20 Daily SMA 1805.09
50 Daily SMA 1831.16
100 Daily SMA 1884.29
200 Daily SMA 1845.7
levels
Previous Daily High 1744.73
Previous Daily Minimum 1731.33
Previous Maximum Weekly 1814.37
Previous Weekly Minimum 1730.73
Monthly Prior Maximum 1879.26
Previous Monthly Minimum 1802.79
Daily Fibonacci 38.2% 1736.45
Daily Fibonacci 61.8% 1739.61
Daily Pivot Point S1 1728.68
Daily Pivot Point S2 1723.31
Daily Pivot Point S3 1715.28
Daily Pivot Point R1 1742.08
Daily Pivot Point R2 1750.11
Daily Pivot Point R3 1755.48

Source: Fx Street

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