Spot Gold Technical Analysis

In early Asian trading on Thursday (July 7), spot gold rose in shock at the opening and is now reported at 1,744.1USD per ounce. Looking back on yesterday’s market, the market still closed overcast on Wednesday. The Asian-European session fluctuated around the range of 1760 to 1772 while the US session fell below the 1760 line and then accelerated to a new daily low of 1732.0, and finally closed at 1739.0 USD per ounce with a Yin K on the daily online.

In terms of news, the minutes of the Fed meeting released early this morning showed that if inflation continues to deteriorate, the Fed will raise interest rates by 50 basis points or 75 basis points in July to control inflation, reiterating its hawkish stance. As the market’s worries about the risk of recession are intensifying, funds flow into the dollar to seek safety, further boosting the dollar’s strength.

According to the position report of the world’s largest gold ETF, since June 22, US time, the reduction of gold holdings has continued, and the reduction has increased since July, with a cumulative reduction of 25.88 tons of gold.

Regarding U.S. Treasury yields, the two-year and 10-year yield curves are inverted, seen by the market as an indicator of a possible U.S. recession in two years’ time. Although Fed officials emphasized that they are not worried about recession, some analysts believe that if economic growth shows signs of slowing down significantly, the Fed will adjust its hawkish policy in the future.
The U.S. non-farm payrolls data for June will be released on Friday, and it is necessary to focus on data such as unemployment and wage levels, which will provide guidance for the Fed’s policy implementation.

Technically, spot gold pierced through the lower track of Bollinger Bands on the weekly and daily charts, and there may be signs of correction in the short term. The daily chart has received a number of negative lines in a row, and the KD indicator is death cross down, and the trend remains bearish. In the 4-hour period, the gold price fluctuated at a low level, and the KD indicator was golden cross; in the 1-hour period, the broken yang was continuously closed, the low point rose, and there was short-term upward momentum, and need to pay attention to the above position at 1748/1754. In general, the big cycle is bearish, and the small cycle has the demand for correction, it is recommended to sell on rallies during the day.

Resistance positions: 1748/1754/1760
Support Location: 1732/1722/1716

Investment Advice:

Sell around 1750-1753, defend 1756, target 1740/1733/1725.

Analyst: Mr.Chris Lau, Independent Analyst

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