The Current Dynamics
The XAU/USD pair continues to trade above the 2300.0 level, supported by various factors, with the rhetoric of the US Federal Reserve (Fed) members being a significant highlight.
With the Fed transitioning to a more flexible monetary policy, as indicated by the Chicago Mercantile Exchange (CME) FedWatch tool, there is an 8.3% probability of a rate cut at the July 31 meeting. For the September meeting, the expectation of a cut increased from 21.0% to 38.5%, influenced by speeches from regional department heads. Recently, Patrick Harker, President of the Philadelphia Federal Reserve Bank, stated that the Fed's new plan only foresees a reduction in borrowing costs this year, conditional on inflation and labor market forecasts. Consequently, investors are preparing for a prolonged period of high reference rates, favoring safe-haven assets like gold.
Another reason for the potential rise in precious metal prices is the correction in the equity market. Since early June, the yield on major 10-year US Treasury bonds has fallen from 4.610% to 4.273%, making them less attractive compared to late spring. However, when evaluating trading volumes of gold contracts on the CME, there are no signs of significant growth, with about 170 thousand contracts traded compared to 300 thousand at the end of May.
Support and Resistance Levels
On the daily chart, the trading instrument is correcting within a sideways channel with limits between 2430.0 and 2290.0.
Technical indicators are softening the sell signal: fast EMAs on the "Alligator" indicator are close to the signal line, and the AO histogram is forming ascending bars below the transition level.
Resistance Levels: 2340.0, 2420.0
Support Levels: 2290.0, 2220.0
Trading Scenarios
Long Positions: Can be opened after the price rises and consolidates above the 2340.00 level, with a target of 2420.00. Place the Stop Loss order at 2300.00. Timeframe: 7 days or more.
Short Positions: Can be opened after the price falls and consolidates below the 2290.00 level, with a target of 2220.00. Place the Stop Loss order at 2330.00.
The XAU/USD pair continues to trade above the 2300.0 level, supported by various factors, with the rhetoric of the US Federal Reserve (Fed) members being a significant highlight.
With the Fed transitioning to a more flexible monetary policy, as indicated by the Chicago Mercantile Exchange (CME) FedWatch tool, there is an 8.3% probability of a rate cut at the July 31 meeting. For the September meeting, the expectation of a cut increased from 21.0% to 38.5%, influenced by speeches from regional department heads. Recently, Patrick Harker, President of the Philadelphia Federal Reserve Bank, stated that the Fed's new plan only foresees a reduction in borrowing costs this year, conditional on inflation and labor market forecasts. Consequently, investors are preparing for a prolonged period of high reference rates, favoring safe-haven assets like gold.
Another reason for the potential rise in precious metal prices is the correction in the equity market. Since early June, the yield on major 10-year US Treasury bonds has fallen from 4.610% to 4.273%, making them less attractive compared to late spring. However, when evaluating trading volumes of gold contracts on the CME, there are no signs of significant growth, with about 170 thousand contracts traded compared to 300 thousand at the end of May.
Support and Resistance Levels
On the daily chart, the trading instrument is correcting within a sideways channel with limits between 2430.0 and 2290.0.
Technical indicators are softening the sell signal: fast EMAs on the "Alligator" indicator are close to the signal line, and the AO histogram is forming ascending bars below the transition level.
Resistance Levels: 2340.0, 2420.0
Support Levels: 2290.0, 2220.0
Trading Scenarios
Long Positions: Can be opened after the price rises and consolidates above the 2340.00 level, with a target of 2420.00. Place the Stop Loss order at 2300.00. Timeframe: 7 days or more.
Short Positions: Can be opened after the price falls and consolidates below the 2290.00 level, with a target of 2220.00. Place the Stop Loss order at 2330.00.