A Short Term Outlook: XAU/USD (Gold); July 18, 2022

A Short Term Outlook: XAU/USD (Gold)

Gold starts a new week on a positive note and touches $1,723 mark during early U.S. session. The pair failed to find support above $1,722 mark and slips back below $1,720 mark. U.S. Economic Calendar will remain empty for the day.

Let’s keep in mind the following statements related to the gold:

  • Gold has been selling off recently in the face of higher U.S. yields.
  • Ukraine’s Deputy Governor Kateryna Rozhkova confirmed that the nation sold around $12bln worth of gold during the Russian invasion of the nation. She said “We are selling this gold so that our importers are able to buy necessary goods for the country.”
  • Investors have trimmed bets of a 100bps Fed rate hike vs a 75 bps hike at the July FOMC meeting.
  • Whether it will be a 100-basis-point hike or a 75-basis-point hike, the Fed will show its commitment to fighting inflation at the July meeting.
  • Analysts remain cautious as the $1,700 an ounce level is a dangerous area for gold. A sustained close below $1,700 on H1 chart likely to check dip supports.
  • Investors worldwide are cutting exposure to the precious metal.
  • U.S. June inflation result was 9.1 percent, the highest since 1981. Inflation will continue to be a problem, and it will necessitate the Fed to get tight Monetary Policy, which is negative for gold.
  • The one and only potential positive driver for gold going forward is the yield curve inversion. The U.S. saw its 10-year and 2-year Treasury yields invert, which means that yields on two-year U.S. Treasuries are now higher than yields on the ten-year. In the past, this has pointed to an upcoming recession. The difference in yields is currently bigger than at any time in the last 22 years.
  • The focus will remain on the Fed’s FOMC meeting due on July 27, 2022.

Source: Kitco news

Technical View:

XAU/USD (Gold):

  • old erases previous gain and hovers around $1,712 mark.
  • The pair made intraday high at $1,723 and Low at $1,707 mark.
  • A day chart and H1 chart with triple EMA suggest bearish trend for the time being.
  • A sustained close above $1,722 on H1 chart requires for the upside rally.
  • Alternatively, a consistent close below $1,708 on H1 chart will test further supports.
$1,708 $1,722
$1,704 $1,728
$1,698 $1,732
$1,691 $1,738
$1,684 $1,742


Take a look and do trade wisely!
Good Luck