Spot Gold Ended The Week With Solid Gains Of 1.4 Percent Following Dovish Comments By The Us Federal Reserve Officials

Spot Gold Ended The Week With Solid Gains Of 1.4 Percent Following Dovish Comments By The Us Federal Reserve Officials

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  • Weekly Signals
  • 2021, 31 July

Brief:

Spot Gold ended the week with solid gains of 1.4 percent following dovish comments by the US Federal Reserve officials in the recent policy meet. The US FED kept interest rates unchanged and didn’t give any fixed timeline on tapering of its expansionary approach after the two-day meet. Interest rates steady at record low levels undermined the US Treasury yield and the Dollar in turn boosting appeal for the non-interesting bearing Gold.

Also, increasing cases of the new variants of coronavirus raised threats of further slowdown in the global economic recovery which continued to hamper market sentiments in turn supporting the safe haven, Gold. Low interest rates and no signs of tapering by the US FED amid the widespread of the Delta variant virus might continue to support Gold prices in the coming week.

Nevertheless, gold remains on track to record its biggest weekly gains since May 21 and seems poised to appreciate further amid signs that the Fed will stick to its ultra-lose policy stance for a longer period. The US central bank on Wednesday acknowledged that the economy has made progress towards the maximum employment and price stability goals. However, the Fed Chair Jerome Powell took a dovish turn at the post-meeting press conference.

Powell emphasised that they were some ways away from substantial progress on jobs. He was also cautious about tapering and said that policymakers discussed some details but it will take a few more meetings to get into it. The market speculations were further reinforced by Thursday's disappointing US GDP report, which showed that the world's largest economy expanded by 6.5% annualized pace in the second quarter as against the 8.5% growth anticipated.

Technical outlook::

Looking at the technical picture, acceptance above the very important 200-day SMA favours bullish traders. That said, it will be prudent to wait for some follow-through buying beyond the monthly swing highs, around the $1,834 region, before positioning for any further upside. The next relevant hurdle is pegged near the $1,845-46 area, above which gold is likely to accelerate the momentum towards the $$1,866 area. Some follow-through buying should allow bulls to eventually aim to reclaim the $1,900 round-figure mark.

On the flip side, the 200-day SMA, currently around the $1,821 region, might now protect the immediate downside. This is followed by support near the $1,810 horizontal level, below which gold could slide back to the $1,800 mark. Some follow-through selling below the key $1,790 support might prompt some aggressive technical selling. The next relevant support is pegged near the $1,765-60 region before the XAU/USD eventually drops to challenge monthly swing lows, around the $1,750 region.

Suggestion:

Buy above 1755 for 1916 and 1950

Else

Sell below 1755 for 1675 and 1585

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