Current trend

After another tightening of the US Federal Reserve’s monetary policy, the XAU/USD pair is falling to a June low in the 1905.00 area.

Published last week, US Q2 gross domestic product (GDP) was higher than analysts’ expectations of 1.8% and amounted to 2.4% compared to 2.0% earlier. Also, a 25 basis point hike to 5.50% provides strong support for the US currency and is likely to weigh on gold positions further if the US economy continues to recover rapidly.

There is a correction in the market of gold contracts: according to the latest report of the US Commodity Futures Trading Commission (CFTC), last week, the number of net speculative positions in the asset amounted to 173.6K compared to 193.3K a week earlier. If you pay attention to the local dynamics, then the number of swap dealers’ positions consolidated at 86.593K for the “bulls” against 249.904K for the “bears” and last week, the sellers reduced the number of contracts by 14.216K, while the buyers increased them by 2.193K.

The long-term trend remains upward: the key support is at 1905.00, after the test of which it is worth considering long positions with the target at 1980.00. In case of a breakdown of the support level of 1905.00, the trend will reverse downwards to 1810.00.

The medium-term trend is downward: in July, quotes reached the key resistance area of 1984.00–1975.00 and failed to overcome it, and short positions with the target in zone 2 (1914.00–1906.00) become relevant. In case of a breakout of the resistance area 1984.00–1975.00 and the price consolidation above it, the medium-term trend will reverse upwards, and the zone 2067.00–2058.00 will become the target for purchases.

Support and resistance

Resistance levels: 1980.00, 2050.00.

Support levels: 1905.00, 1810.00.

Trading tips

Short positions may be opened from 1975.00 with the target at 1915.00 and stop loss around 1998.00. Implementation period: 9–12 days.

Long positions may be opened above 1998.00 with the target at 2055.00 and stop loss around 1970.00.