- Gold prices fell sharply on Friday, but closed the week in the green.
- The bulls failed to sustain the price above the 200-day SMA.
- According to well-known analyst Eren Şengezer, the downtrend correction could extend to $1,800 in the short term.
Gold prices remained relatively quiet on Monday and Tuesday after closing the previous three weeks in the positive territory, but managed to regain their strength on Wednesday. Following the 1% midweek gain, XAU/USD maintained its bullish momentum and touched a one-month high at $1,834 on Thursday. But on Friday he took back most of his rally. However, gold prices settled above $1,810 and posted minor weekly gains.
What happened in the gold market last week?
Earlier in the week, the risk-averse market environment provided a foothold for the dollar. Reflecting the broad-based USD strength, the US Dollar Index (DXY) posted modest daily profits on Monday and continued its rally following Tuesday’s June inflation data and rose 0.6% that day. Annual inflation, as measured by the Consumer Price Index (CPI), rose from 5% in May to 5.4% in June, the US Office of Labor Statistics reported.
This reading is 4%. It came in above the market expectation of 9. In addition, Core CPI, which excludes variable food and power prices, rose from 3.8% to 4.5% year-on-year. However, the downside move of XAU/USD remained finite as buyers continued to defend the key reinforcement at $1,800. On Wednesday, statements by FOMC Leader Jerome Powell to be presented in the US Federal Reserve’s semi-annual Monetary Policy Report to the US Financial Services Council triggered the USD sell-off and allowed gold to rise. Jerome Powell reiterated that monetary policy will continue to provide a strong foothold, noting that it is still appropriate for policy to remain highly supportive.
These data suppressed gold prices! Here are the details…
As we previously reported as , on Thursday, information from the USA revealed that Initial Unemployment Claims fell by 360,000 in the week ending July 10, to the lowest level in nearly 17 months. Additionally, the NY Empire State Manufacturing Index rose to 43 in July from 17.4 in June. This outperformed the analysts’ 18 forecasts by a wide margin. On a negative note, the FED reported that Industrial Production increased by 0.4% in June, compared to the market consensus of 0.7%. Despite mixed information, DXY has made a modest recovery, causing XAU/USD to enter the consolidation step ahead of the weekend.
Finally, the monthly publication of the US Census Bureau on Friday showed that Retail Sales increased by 0.6% in June, exceeding the market forecast for a decline of 0.4%. On a negative note, the University of Michigan Consumer Belief Index fell from 85.5 in June to 80.8 in advanced claim in July. In addition, the 1-year Inflation Outlook component of the survey rose from 4.2% to 4.8%, the highest level since August 2008. Despite mixed information releases, the gloomy market mood helped the USD continue to find demand ahead of the weekend and put pressure on XAU/USD.
Which developments are valuable for gold prices next week?
There will be no random high-level information releases in the first half of next week. According to popular analyst Eren Şengezer, the market valuation of the USD during this period is expected to drive the movements of XAU/USD within the end of the precious technical levels. On Thursday, the European Central Bank (ECB) will announce its Interest Rate Decision and publish the Monetary Policy Statement.
However, according to prominent analyst Eren Şengezer, the ECB has essentially unveiled its revised policy strategy and is unlikely to offer any random new insights into the bank’s policy outlook. On Friday, IHS Markit’s July Manufacturing and Services PMI preliminary numbers from Germany, the euro area and the US will be looked at to give new impetus. According to popular analyst Eren Şengezer, it is possible for investors to pay attention to the basic details of input price pressures rather than headline numbers.
Which levels should be expected next week for gold prices? The analyst explains
According to well-known analyst Eren Şengezer, the Relative Strength Index (RSI) on the daily chart accurately dropped to 50 on Friday, showing that the bullish momentum has begun to weaken. Additionally, buyers were unable to sustain gold above the critical 200-day SMA currently at $1,825. Both of these developments show that XAU/USD may make a technical correction in the near-term before the next step, according to Eren Şengezer.
On the downside, according to Eren Şengezer, the strong foundation for gold prices seems to be formed at $1,800 (psychological level, 50% retracement of the Fibonacci April-June uptrend). A one-day close below this level could open the door for real additional losses at $1,790 (100-day SMA, 20-day SMA), according to Eren Şengezer. According to Eren Şengezer, resistances for gold prices are $1,825 (Fibonacci 38.2% retracement, 200-day SMA), $1,834 (July 15 high, 50-day SMA) and $1,845 (static level). levels are.