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Fundamentals

During Monday's (July 17) Asian session, spot gold surged narrowly higher, and it is currently trading near 1955. As the data of June is confirmed, the recent market trade has been shifted to the Fed's July rate hike. From the data, the U.S. June CPI and PPI are expected to fall back, showing that U.S. inflation is cooling sharply, reinforcing the market expectations of the ending of the Fed rate hike. Currently, the market sentiment has changed, and according to the CME FedWatch tool, the market still believes that the probability of the Fed raising interest rates by 25 basis points this month is 95%, but the interest rates will not be raised again for the rest of the year. Once again, the market has gone to the left of policy, as reflected in the 6 straight negative moves in the USDX, down 3.5%, and a rally in gold prices to 1960. However, experience tells us that the market is always enlarging the impact of data. In the short term, the data is not enough to change the Fed's hawkish stance, and the descending of the USDX is limited. Therefore, gold prices may face retracement risks.

Today's attention: The New York Empire State Manufacturing Index for July.

Technical Analysis

Daily chart: gold stays at 1963 after last week's appreciation, and it oscillated near 1955 in the evening session. As gold hovers at highs after surging, the technical analysis for this week will be a direction in the area. Regarding the performance of last week's gold and the USDX, the gold bulls seem to be suppressed, the performance is not very strong. Soon, gold may also need to carry out a certain oscillation, as well as return to confirm the support and then turn upward, which could be more favorable to the later session. Moreover, after gaining continuously last week, the daily chart closed at highs negatively on Friday, just below the 60-day SMA. Thus, as long as this technical situation is unchanged, it will be hard for gold to climb up higher. So, gold will temporarily stay under 1963 and oscillate at highs. Last week, it fell back to the 5-day SMA (1950) and gained support, and there is still support. If it is crossed, gold may reach the 10-day SMA between 1936-1940. After gold gets stable in this range, it will probably be boosted again later.

Today's trading plan: As it is mentioned last trading day, it is recommended to go short at 1963. Although it is very close to 1946, the position to take profits, the gains and the profit/loss ratio are splendid. In addition, gold started with retracement earlier today and then opened a new round of ascending pattern. It is recommended to go short at highs in the near term and place long positions. Moreover, if gold rises to 1960, investors can go short with small positions and set the stop-loss at 1964, and Investors should take profits step by step between 1950-1940. Furthermore, gold may oscillate at 1950 for a long time, and if it plunges to 1940, investors can arrange long positions appropriately.

Trading Recommendations

Trading direction: Short

Entry price: 1961

Target price: 1940

Stop loss: 1964

Support: 1950.000/1938.000

Resistance: 1963.000/1970.000