Gold (XAU/USD) Update: MACD Hints at Further Downside

[MongiIG]

Jul 15, 2022 | DailyFX
Richard Snow, Analyst

GOLD (XAU/USD) ANALYSIS

• Gold drops through 1800 with ease, on the verge of testing 1700
• Key technical levels for gold as the MACD hints at continued selling

GOLD DROPS THROUGH 1800 WITH EASE, 1700 IN SIGHT

Gold has dropped rather aggressively since breaking below the 1800 level last week. A combination of rising interest rate expectations and worsening economic data across the board has laid the foundation for golds sharp decline.

The precious metal continues the downtrend this morning after Chinese GDP printed at a meager 0.4% for the lockdown impacted Q2, down from a forecasted 1%. This has knock-on effects as China and the US have now revealed traces of economic fragility, adding to recession fears. First quarter US GDP declined by 1.6%, declining consumer sentiment and the latest rendition of the yield curve inversion (US10Y – US02Y) have added to recession concerns.

It is also worth noting that gold, often regarded as an inflation hedge, has not been rising in line with surging inflation. This is because gold’s status as an inflation hedge tends to hold up better over the long run while shorter-term influences like the state of the economy and interest rate developments continuing to influence the direction of the yellow metal for now.

 

HOW MUCH FURTHER CAN GOLD GO?