Technical Analysis

GOLD Price Analysis – July 09, 2024

By LonghornFX Technical Analysis
Jul 9, 20244 min

Daily Price Outlook

Gold prices (XAU/USD) have maintained their upward momentum and remained well bid around $2,363 per ounce and hitting an intraday high of $2,368. This surge is largely attributed to the weakening US dollar, which lost its ground on the back of the disappointing US employment data last week.

Furthermore, increased geopolitical tensions in the Middle East and political uncertainties in France are fostering a cautious market sentiment, bolstering gold prices.

Looking ahead, market participants are closely watching Fed Chair Jerome Powell's semi-annual Congressional testimony, along with speeches from Fed officials Michael Barr and Michelle Bowman. The upcoming release of US Consumer Price Index (CPI) inflation data on Thursday will also be crucial in shaping market expectations.

Impact of US Employment Data on the US Dollar and Gold Prices

On the US front, the broad-based US dollar is facing pressure as traders anticipate a Federal Reserve interest rate cut in September, spurred by last week's disappointing employment figures.

According to the CME FedWatch tool, there is now a 76% probability of a rate cut in September, up from 71% last Friday. This increasing expectation is contributing to the dollar's decline across financial markets.

On the data front, the US employment growth moderated in June, with Nonfarm Payrolls (NFP) increasing by 206,000, slightly above expectations of 190,000 but below May's revised figure of 218,000.

Concurrently, the Unemployment Rate rose to 4.1% from May's 4%. Wage growth, as indicated by Average Hourly Earnings, decelerated to 3.9% year-over-year in June from 4.1%, aligning with market forecasts.

Therefore, the anticipation of a Federal Reserve rate cut following weaker US employment data has softened the US dollar, boosting gold prices as investors seek safe-haven assets amid economic uncertainty.

Impact of Political Uncertainty and Chinese Demand on Gold Prices

Furthermore, gold prices could see additional upward momentum driven by cautious investor sentiment amidst political uncertainties in France and geopolitical tensions in the Middle East. Gold, traditionally considered a safe-haven asset during periods of turmoil, is increasingly appealing to investors seeking stability amidst global uncertainty.

However, the upward momentum in gold prices may face challenges as China, the world's largest gold consumer, kept its gold holdings unchanged for the second consecutive month in June, halting purchases after 18 months of consistent buying.

This pause in demand from a major buyer could alleviate some of the upward pressure on prices.

Gold prices could continue to climb amid global uncertainty, fueled by political tensions in France and the Middle East. However, China's pause in gold purchases after 18 months may ease upward pressure on prices.

GOLD Price Chart - Source: Tradingview
GOLD Price Chart - Source: Tradingview

GOLD (XAU/USD) - Technical Analysis

Gold Spot (XAU/USD) is currently trading at $2,359.260 on the 2-hour chart. The key pivot point is at $2,360.079 (Green line). Immediate resistance is observed at $2,367.000, with further resistance at $2,379.404 and $2,391.215.

On the downside, immediate support is located at $2,351.388, followed by $2,342.804 and $2,326.893. The 50-day Exponential Moving Average (EMA) is positioned at $2,360.079, while the 200-day EMA stands at $2,351.388.

The Relative Strength Index (RSI) is currently at 40.07, suggesting that the asset is approaching oversold territory. This level indicates potential buying interest may emerge if the RSI moves below 30. The 50-day EMA is at $2,360.079, closely aligning with the current price and acting as a pivot point for potential upward or downward movements. The 200-day EMA at $2,351.388 offers a critical support level that could determine the near-term direction of Gold.

For traders, a strategic entry point is recommended above $2,351 with a take profit level at $2,367. A stop loss should be set at $2,342 to manage risk effectively. Maintaining above the pivot point of $2,360.079 could indicate a bullish trend continuation, whereas falling below could reinforce a bearish outlook.

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