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Fundamentals

During Tuesday's (July 18th) Asian session, spot gold rose narrowly higher, and it is currently trading at 1960. Overnight, the New York Fed announced that the July manufacturing index fell to 1.1% from 6.6% in June, showing that the state's manufacturing growth nearly stopped. However, the inflation cooled further, and U.S. Treasury Secretary Yellen said Monday that U.S. growth has slowed, but the domestic labor market is still strong. She predicted that the U.S. will not have a recession. Despite the mixed recent data, the U.S. economic resilience is strong, especially, the job market remains active, and the recent weakening of inflation in the short term is not enough to change the Fed's hawkish stance. Besides, July's interest rate hike is basically fixed, and gold may have to pull back a little to take full advantage of the consolidation for the market's overreaction. Then, gold may restart to ascend later.

Today, please focus on the U.S. Retails Sales Data for June.

Technical Analysis

Daily chart: Gold extended the oscillating pattern yesterday and was suppressed by 1960. During the evening session, it retraced to the lower level at 1945 as expected, but soon surged again and closed above 1950 with a doji star. Recently, there isn't trading logic for gold due to the impact of the USDX pattern, which results in uncertainties in the gold trend. There is space for a retracement, but it is unlikely to be achieved soon. In addition, despite gold dropping below the 5-day SMA, it did not actually plunge too much, thus the strong pattern remains. Furthermore, it is essential to check the resistance at 1962, while the highs will be maintained and the lows will descend if this position is kept. However, if the market sentiment changes or the USDX rebounds, the short-term gold prices will turn weaker, and gold may plummet to the range between the 10-day SMA and the 20-day SMA (1930-1940) to seek support. Presently, the SMAs are lined separately, and gold stands above the SMAs. Therefore, gold is expected to oscillate at highs, but the ascending momentum turns weaker. Accordingly, traders should go short with small positions and stop loss in time.

Trading recommendations: As it was mentioned in the previous session, investors should go short at 1961, and gold once plunged to 1945 as expected. Meanwhile, it is important to pay attention to the retracement and whether gold will start a new round of appreciation. So, investors should go short at highs soon and prepare for long positions. If gold climbs to 1962, investors can go short with small positions, set the stop-loss at 1966 and take profits at 1950. Gold may also oscillate at 1950, and investors shall trade long positions if gold declines to 1940 in this week.

Trading Recommendations

Trading direction: Long

Entry price: 1938

Target price: 1970

Stop loss: 1928

Support: 1950.000/1938.000

Resistance: 1963.000/1970.000