Gold update for 22-26 July
Profit-Taking: After gold reached near-record highs earlier in the year, many investors started selling to lock in profits. This is a common reaction after significant rallies, contributing to downward pressure on prices .
Strengthening U.S. Dollar: The U.S. dollar has been strengthening, which typically leads to a decline in gold prices as it becomes more expensive for investors holding other currencies. This inverse relationship between the dollar and gold has been a significant factor in the recent sell-off .
Interest Rate Expectations: There has been a shift in expectations regarding the Federal Reserve’s interest rate policy. Initially, there was speculation about multiple rate cuts in 2024, but recent data and Fed statements suggest only one potential cut for the rest of the year. Higher real yields and a less dovish outlook from the Fed reduce the appeal of gold as an inflation hedge .
Technical Selling: Technical factors also played a role, with some analysts pointing to chart patterns suggesting a bearish outlook in the short term. Patterns such as the head-and-shoulders formation indicate potential further declines if key support levels are breached .
Top-Down Analysis of Gold (XAU/USD)
Monthly Chart Analysis
• Trend: The overall trend on the monthly chart is bullish, with gold making higher highs and higher lows.
• Key Levels:
• Support: Around 2,000, which has acted as a significant psychological level.
• Resistance: The previous high near 2,500.
Weekly Chart Analysis
• Trend: The weekly trend also shows a bullish structure, maintaining higher lows.
• Key Levels:
• Support: Around 2,300 and 2,200, where consolidation has occurred in the past.
• Resistance: The recent high around 2,500.
Daily Chart Analysis
• Trend: The daily chart indicates a bullish trend with a recent pullback from highs.
• Moving Averages: The 50-day and 200-day moving averages are both sloping upwards, confirming the bullish trend.
• Key Levels:
• Support: Around 2,350 and 2,250, where recent consolidations and previous demand zones are located.
• Resistance: Recent highs around 2,500.
4-Hour Chart Analysis
• Trend: The 4-hour chart shows a short-term downtrend within the context of the broader bullish trend.
• Key Levels:
• Support: Around 2,350 and 2,300, aligning with the daily support zones.
• Resistance: Immediate resistance around 2,450 and the recent high near 2,480.
1-Hour Chart Analysis
• Trend: The 1-hour chart is in a corrective phase, showing a series of lower highs and lower lows.
• Key Levels:
• Support: Immediate support around 2,380 and stronger support at 2,350.
• Resistance: Short-term resistance at 2,430 and 2,450.
15-Minute Chart Analysis
• Trend: The 15-minute chart shows the recent downtrend but with signs of potential reversal as RSI indicates oversold conditions.
• Key Levels:
• Support: Immediate support at 2,400, with next levels at 2,380.
• Resistance: Resistance at 2,420 and 2,430.
Summary
• Long-Term Trend: Bullish
• Medium-Term Trend: Bullish with a recent pullback
• Short-Term Trend: Corrective downtrend within a larger bullish context
Trading Strategy
• Buy the Dip: Look for buying opportunities around key support levels (2,350 and 2,300).
• Confirmation: Wait for bullish confirmation signals like a higher low or bullish candlestick patterns at these support levels.
• Targets: Initial targets can be set at 2,450 and 2,500.
• Risk Management: Use stop-loss orders just below key support levels to manage risk.
By considering the analysis from higher time frames to lower time frames, this approach allows aligning the overall bullish trend with short-term corrective phases to find optimal entry points.
Strengthening U.S. Dollar: The U.S. dollar has been strengthening, which typically leads to a decline in gold prices as it becomes more expensive for investors holding other currencies. This inverse relationship between the dollar and gold has been a significant factor in the recent sell-off .
Interest Rate Expectations: There has been a shift in expectations regarding the Federal Reserve’s interest rate policy. Initially, there was speculation about multiple rate cuts in 2024, but recent data and Fed statements suggest only one potential cut for the rest of the year. Higher real yields and a less dovish outlook from the Fed reduce the appeal of gold as an inflation hedge .
Technical Selling: Technical factors also played a role, with some analysts pointing to chart patterns suggesting a bearish outlook in the short term. Patterns such as the head-and-shoulders formation indicate potential further declines if key support levels are breached .
Top-Down Analysis of Gold (XAU/USD)
Monthly Chart Analysis
• Trend: The overall trend on the monthly chart is bullish, with gold making higher highs and higher lows.
• Key Levels:
• Support: Around 2,000, which has acted as a significant psychological level.
• Resistance: The previous high near 2,500.
Weekly Chart Analysis
• Trend: The weekly trend also shows a bullish structure, maintaining higher lows.
• Key Levels:
• Support: Around 2,300 and 2,200, where consolidation has occurred in the past.
• Resistance: The recent high around 2,500.
Daily Chart Analysis
• Trend: The daily chart indicates a bullish trend with a recent pullback from highs.
• Moving Averages: The 50-day and 200-day moving averages are both sloping upwards, confirming the bullish trend.
• Key Levels:
• Support: Around 2,350 and 2,250, where recent consolidations and previous demand zones are located.
• Resistance: Recent highs around 2,500.
4-Hour Chart Analysis
• Trend: The 4-hour chart shows a short-term downtrend within the context of the broader bullish trend.
• Key Levels:
• Support: Around 2,350 and 2,300, aligning with the daily support zones.
• Resistance: Immediate resistance around 2,450 and the recent high near 2,480.
1-Hour Chart Analysis
• Trend: The 1-hour chart is in a corrective phase, showing a series of lower highs and lower lows.
• Key Levels:
• Support: Immediate support around 2,380 and stronger support at 2,350.
• Resistance: Short-term resistance at 2,430 and 2,450.
15-Minute Chart Analysis
• Trend: The 15-minute chart shows the recent downtrend but with signs of potential reversal as RSI indicates oversold conditions.
• Key Levels:
• Support: Immediate support at 2,400, with next levels at 2,380.
• Resistance: Resistance at 2,420 and 2,430.
Summary
• Long-Term Trend: Bullish
• Medium-Term Trend: Bullish with a recent pullback
• Short-Term Trend: Corrective downtrend within a larger bullish context
Trading Strategy
• Buy the Dip: Look for buying opportunities around key support levels (2,350 and 2,300).
• Confirmation: Wait for bullish confirmation signals like a higher low or bullish candlestick patterns at these support levels.
• Targets: Initial targets can be set at 2,450 and 2,500.
• Risk Management: Use stop-loss orders just below key support levels to manage risk.
By considering the analysis from higher time frames to lower time frames, this approach allows aligning the overall bullish trend with short-term corrective phases to find optimal entry points.
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