Gold needs to break 1794 soon.

July 5 2021

In last weeks trade, the remarkable thing for me was the timing of the weekly low for Gold. The market hit 1750.50 on Tuesday. That was three days ahead of the US NFP, the expected big US bullish data release.

The odd thing I noticed was that the USD continued to strengthen against all the major currencies ahead of the NFP. But, it was weaker against Gold during the same three day period.
Was this a sign of a bottom being in place for the yellow metal or seller fatigue? I am not sure yet.

However, it is clear to me, we need to break the strong resistance at 1792/1794 to progress to 1800 and beyond. This would confirm that a firm base is in place that would lead to further gains towards my target of 1840.00 in the medium term.

The big question I have for this week is will the market get spooked by the FOMC minutes or not. The argument from the Gold bears that the Federal Reserve is going to raise rates soon because of high US inflation and the US economy overheating is far from proven.

The messages from the Federal Reserve Presidents are split between the doves and hawks. However, caution on interest rates will likely prevail as the fear that the delta covid variant could cause economic setbacks, delaying early central bank tightening.

I think you should always watch what the Federal Reserve do and not what they say. I personally think US Interest rates are not going up in a hurry. Although tapering of monthly Bond and MBS purchases will start early next year and is likely to be announced at the September meeting of the FOMC.

Technical Analysis for July 5th 2021.

Early buying interest is strong at 1784/1882. however, a break here would open up a test of 1778/1776.
Resistance is found at 1789/1791 ahead of the key supply area at 1794, where a break would open up 1800 and 1804 in extension.

Don’t forget today is a US holiday. Liquidity, which is never that great anyway when trading Gold, could become a problem and exaggerate moves, particularly as we head into the European close tonight.

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