Gold market analysis

"Gold Price May Hit Short-Term Cycle Bottom" 18/7 09:47 am Completed 

Gold prices have recently been largely responding to the performance of US economic data. Yesterday, the US released June retail sales data that was better than expected, with a monthly increase of 0.6% and an annual growth rate expanding to 3.9%, providing an excuse for bears to sell off gold. However, after falling to $3,310, spot gold prices rebounded sharply and continued to climb to a high of $3,341 in the New York afternoon session, eventually closing at $3,340. Therefore, from the daily chart perspective, there is no effective signal of a decline in gold prices. 

There is a maximum of 1.25 percentage points of room for the US interest rate to be cut. 

Yesterday, the president of the San Francisco Federal Reserve Bank, Daly, said that two interest rate cuts this year are a reasonable expectation. When asked about the possibility of a rate cut in July, he said that whether it is in July or September is not the key point; the issue lies in the future trend, that is, the interest rate will decline as inflation drops, but he emphasized that the interest rate will eventually stabilize at 3% or higher. In other words, the Federal Reserve has at most a 1.25 percentage point room for rate cuts in this rate-cutting cycle, of course, depending on the performance of inflation. On the other hand, Federal Reserve Governor Waller stated that the Federal Reserve should cut interest rates by 25 basis points at the July meeting and said that there is nothing wrong with taking preventive rate cut measures. A rate cut in July might provide the Federal Reserve with room to keep interest rates unchanged at the next few meetings, and he also indicated that he would vote in favor of a rate cut at the July meeting. 

The intraday adjustment range of gold prices is expected to narrow. 

The gold price has only shown fluctuations without any breakthrough on the daily chart. From the hourly chart, the gold price is still in the downward trend since July 14th. However, it should be noted that the gold price is likely to reach the bottom of the short-term cycle today. Therefore, it is unlikely to experience a break below the bottom as in the past few trading days. Even if there is a pullback within the day, the extent of the adjustment will be at most from yesterday's low to the 50% retracement level of the maximum increase so far, which is approximately $3,327. Even a 38.2% pullback to the $3,331 level will find support. 

If the gold price drops to the above-mentioned level, it can be regarded as a buying opportunity. Conversely, if the gold price consolidates at a high level and then breaks through the Asian morning high of $3,344, following the trend and entering the market is also a strategy, with the targets at $3,357 and $3,372. In any case, the current gold price still takes $3,321 as an important support level. A close below this level on the daily chart will be regarded as a signal of a downturn. 

The above content is for reference only and does not constitute investment advice. MTF Special Analyst Zheng Guangfu