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Fundamentals

During the Asian session on Monday (July 31), spot gold fluctuated to the upside and is currently trading around 1954. The data released by the US Department of Commerce on Friday fully confirmed the authenticity of the earlier news of the sharp slowdown in CPI in June, indicating that the economy is operating in a disinflationary mode. At present, although inflation is falling faster than expected, most market investors are not paying attention to the new data slowing inflation and continue to digest the recent decisions of several central banks instead. The dollar index rebounded but then fell on Friday, and gold prices also found support at low levels. However, XAUUSD rebounded as high as the 1963 level, still indicating an oscillation pattern. As far as the current cycle is concerned, the US dollar index will probably weaken and fall, and investors should still keep trading long positions at lows on gold prices!

Data: The US PCE price index rose 0.2% to 3.0% YoY in June, and the core PCE price index rose 0.2% to 4.1%, which is the slowest growth rate of this index in two years. At the same time, the monthly rate of personal expenditure and real personal consumption expenditure announced by the Ministry of Commerce in June both increased, while the personal income declined.

Data for investors to focus on today include Germany real retail sales MoM and YoY in June, Eurozone Q2 preliminary GDP QoQ (seasonally adjusted), Eurozone preliminary core harmonized CPI YoY in July (not seasonally adjusted), Eurozone preliminary harmonized CPI YoY in July (not seasonally adjusted), and the US Chicago PMI for July. In addition, Austan Goolsbee, Chicago Fed President, will speak at 21:20 tonight, which is the first Fed committee appearance after the PCE data fell. His speech deserves the attention as it will influence investor sentiment tonight.

Technical Analysis

Trading at the daily timeframe, Gold rose first and then fell and finally fluctuated last week, with the highest rise slowly to 1983 and the lowest plunge to 1942 on Thursday. The total room for ups and downs throughout the week is about $40. There was a rebound at the end of Friday, which was not strong enough and the peak was at 1963. Although the daily chart closed positive after the big black body, it did not change the weak state of gold. At the same time, the weekly chart still failed to get rid of the negative closing situation, which finally closed a negative Doji Star. From the perspective of the weekly structure alone, the market runs at a high level and is in the mezzanine of moving averages. Gold is likely to fluctuate in the range this week, and everything should be determined after the release of the August non-farm payrolls this week. At the beginning of the week, traders should keep focusing on the resistance above of the MA10 at 1963 and the support below of the MA20 at 1950. If the price fails to stand firm upon the MA10 at the beginning of the week, the weak trend will be extend in the short term. Otherwise, the impact of the long black body on gold prices will be weakened on Thursday, and gold prices will be more likely to return to their previous strong state. When the gold price rebounds to the MA10 at the beginning of the week, investors can go short without chasing short. Besides, traders can also go long at lows relying on the MA20.

Investors are advised to buy low and sell high in the range. If the price retraces to the MA20 at 1950, you can try to go long with a small position. The stop loss is set at the 1947 line. Investors can take profit step-by-step, we should first focus on the MA5 at 1960, where you can reduce production and move your stop loss to break even. Then, investors are able to focus on the MA10 at 1964. If the price surges to 1964, aggressive traders can also test short with a small position. The stop loss is at 1968, and the target to take profit focuses on the 1950 line.

Trading Recommendations

Trading Direction: Short

Entry Price: 1964

Target Price: 1950

Stop Loss: 1968

Support: 1950.000/1945.000

Resistance: 1960.000/1964.000