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Fundamentals

Spot gold oscillated narrowly during the Asian session on Monday (July 3rd), and it is currently trading around $1920. On Friday night, the U.S. PCE inflation data fell more than expected, resulting in a decline in U.S. Treasury yields, which led to a weaker USD. Meanwhile, gold was boosted and once rose above $1920/oz during the day. But at the same time, the market focused on the central bankers' speeches, and Fed Chairman Powell said he was not concerned about what the market's expectations were, and reiterated the need for two more rate hikes this year. Besides, he believed there would be more rate hikes, and may act in consecutive meetings. Additionally, Powell emphasized that the pace of interest rate hikes has not been determined as it is decided by the data, and a recession may happen but not the most likely scenario. This also put some pressure on gold prices. Massive data will be announced this week, while the market will also focus on the Fed minutes, and Fed Chairman Powell will participate in the Central Bank Research Association (CEBRA) 2023 annual meeting discussions. Thus, it is important to focus on relevant speeches and seek more signals about interest rates.

Data: May PCE price index fell back to 3.8% YoY, personal consumption expenditure stagnated, and Eurozone reconciled CPI of June slowed to 5.5% YoY.

For investors, try to keep an eye on the U.S. ADP employment change in June, the U.S. initial jobless claims for the week ending July 1st, the U.S. June Nonfarm Payrolls change (after quarterly adjusted), and the U.S. unemployment rate in June. Furthermore, there are key data today: U.S. June Markit Manufacturing PMI final data, and U.S. June ISM Manufacturing PMI.

Technical Analysis

Daily chart: Gold changed the pattern compared with last week's situation, and the candlestick chart recorded a doji star near the key support level. Moreover, KDJ also showed a golden cross trend, while the MACD also issued a bullish divergence signal, and fell to the oversold area with signs of turning gold cross. In general, gold has appreciated for 3 consecutive days, exhibiting a bullish candlestick combination pattern at the bottom. Now, as gold initially stays above the 5-day and 10-day SMAs, if it sits above the 10-day SMA at the beginning of the week, it will finally cross through the resistance of the 20-day SMA at $1936 soon. Currently, without sufficient data, gold oscillates temporarily in a range, and it is recommended to buy lows and sell highs. Regarding the second half of the week, try to refer to Nonfarm Payrolls expectations and the impact of the real data of Nonfarm Payrolls before making specific strategy adjustments.

Today's trading recommendations: As it is emphasized last week, try to go long within today and take profits of all positions. When trying to go short, taking care of the situation cautiously is a must, and the positions must be small. Besides, try to go long when gold reaches the support of the 5-day SMA ($1910), and set the stop-loss at $1902. To take profits, the 10-day SMA ($1922) and the resistance of the 20-day SMA ($1936) are essential references. If gold surges rapidly to $1922, it is recommended for traders to go short in the near term by setting the stop-loss at $1925 and taking profits at $1912.

Trading Recommendations

Trading direction: Short

Entry price: 1922

Target price: 1910

Stop loss: 1927

Support: 1910.000/1900.000

Resistance: 1922.000/1936.000