Gold prices enjoyed a good start to the week, as investors scaled back their expectations for a massive Fed rate hike by a full percentage point in July, and after China announced further liquidity stimulus to cope with rising Covid-19 cases and housing debt problems.The latest economic events have all helped to alleviate worries of an imminent recession in the US economy while also providing new vigor to market risk appetite. The dollar is losing ground, with the
DXY index lingering around 107. The fall in the dollar gave the bulls some confidence, with gold hitting an intraday high at $1,725 before falling to $1,711 at the time of this writing.Looking at the daily chart,
gold prices may have found support at the $1,700 per troy ounce area, a level that has not been decisively broken in the past four sessions, which have seen some buyers resurfacing. The 14-day Relative Strength Index (RSI) hit 23 last Friday, the lowest level in nearly four years (August 2018), but the momentum improved at the start of the week.The RSI is now trying to break out of the oversold zone. The MACD line is attempting to climb from depressed levels, but it has yet to reach the signal line. This crossover might result in a bullish signal.
The underlying trend remains bearish, as seen by the two 50- and 200-day moving averages, which formed a death-cross at the start of the month, and the descending channel that has been in place since the February’s peak.
However, if prices break through the $1,750 resistance level, the possibility of an attack on $1,800 might be opened up. On the downside, bears are targeting $1,664 (August 21’s lows) as a a key support level.
Idea written by Piero Cingari, forex and commodities analyst at Capital.com
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.