Gold market analysis

"Gold Price's Short-Term Uptrend Comes to an End" 22/7 10:16 am Finalized 

Yesterday, the spot gold price rose strongly, reaching as high as $3,401 in the early New York market, which can be said to have exceeded expectations. The main reason for the significant rise in the gold price and the sharp drop in the US dollar exchange rate is believed to be related to Powell. According to the report by The Ho Report, US Representative Anna Paulina Luna has filed criminal charges with the Department of Justice, claiming that Federal Reserve Chair Powell gave false testimony twice. Luna said that Powell made several major false statements when testifying before the US Senate Committee on Banking, Housing, and Urban Affairs on June 25 regarding the renovation of the Federal Reserve's Eccles Building. This makes one wonder if Trump is using someone else's hand to find an excuse to fire Powell or force him to resign as the chair of the Federal Reserve, and then introduce a more compliant candidate to take over the Federal Reserve to achieve his wish of cutting interest rates! 

From the daily chart, the spot gold price broke through the higher-level TD downtrend line yesterday, with the measured target at around $3,520. Even though I remain cautious about whether the gold price can maintain its strong momentum in the future, technically, the spot gold price is expected to reach a new historical high. However, investors should still be aware that after a sharp rise yesterday, the gold price often consolidates. After further rising to the $3,402 level in the Asian market this morning, it pulled back to the $3,390 level. Personally, I believe that the gold price will consolidate within the range of yesterday's fluctuation this week, that is, between $3,344 and $3,401, and then attack the $3,500 level. 

$3,356 is expected to be a strong support. 

On the hourly chart, observing the price movement since July 9th, the gold price touched $3,402.77 this morning, slightly exceeding the 100% Fibonacci extension level of $3,402.11. In other words, the upward trend since July 9th is likely to come to an end. The gold price is expected to further consolidate and adjust in the short term. After reaching a high of $3,402 this morning, the gold price has started to decline and formed a bearish engulfing pattern. If the gold price closes below $3,386 on the hourly chart, it indicates a further decline. In the short term, the target is the 50% retracement of the largest increase since July 17th near $3,310, which is $3,356. Only then is it expected to stabilize. 

The significant adjustment in gold prices is a response to the rally since July 9th, with the main support being a pullback to half of the rise during that period. This means that gold prices have the potential to fall to $3,342.8. Given the strong performance of gold prices yesterday, it is expected that $3,367 will be the first strong support level, while $3,356 will be the next stronger support level. However, if gold prices break through the previous high, the next target for a challenge will be $3,451. Nevertheless, gold prices turned around and fell on the same day after reaching this level on June 16th, so it is believed that this level will be extremely resistant. 

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