Gold Prices on Course for Worst Month in Over a Year, More Pain Ahead for XAU/USD?

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Jul 21, 2022 | DailyFX
Daniel Dubrovsky, Strategist

GOLD, XAU/USD, ECB, TECHNICAL ANALYSIS, IG CLIENT SENTIMENT - GOLD BRIEFING:

• Gold is on course for worst month in over one year
• This is despite a weaker US Dollar in recent days
• IGCS data seemingly hinting at more losses ahead

Gold prices weakened over the past 24 hours, sending XAU/USD close and closer towards the 2021 low at 1676. In fact, July has been quite a dismal month for the yellow metal so far. If losses hold at the time of writing, gold is looking at a 6.4% loss in July. That would be the worst monthly performance in over a year.

 

GOLD TECHNICAL ANALYSIS

On the daily chart, gold has confirmed a breakout under the September 2021 low at 1722, inching closer towards the 2021 low at 1676. The latter could play out as key support, with the 20-day Simple Moving Average aiming lower. This line could hold as resistance in the event of a turn higher, perhaps reinstating the broader downside focus. Further losses place the focus on the 78.6% Fibonacci extension at 1656.

 

XAU/USD DAILY CHART

Chart Created Using TradingView

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Gold Price Update: XAU/USD on Track for 6th Consecutive Weekly Decline

Jul 21, 2022 | DailyFX
Richard Snow, Analyst

GOLD (XAU/USD) ANALYSIS

• Tightening global monetary policy weighs on gold as the ECB is set to join the rate hike club
• Gold on track for 6th consecutive weekly decline. 1677 remains a key level of resistance as the metal continues further into oversold territory

GOLD: KEY TECHNICAL LEVELS

Both drops through 1800 and 1760 have not looked back as the precious metal looks set to record a 6th consecutive week of losses. While it appears that global recession fears have eased, global commodity prices continue the downward spiral. Negative fundamentals have dominated gold’s direction and not even a slightly weaker dollar was able to stop the bearish trend.

The 1677 level marks a full Fibonacci retracement of the 2020-2021 move and could trigger a spate of further selling if broken with reasonable momentum. The MACD shows that momentum appears intact for the time being but the RSI continues to trade in oversold conditions – raising the risk of a potential pullback in the coming days. Support appears at 1677, 1645 and then 1557 with resistance all the way back at 1760.

Gold (XAU/USD) Daily Chart

Source: TradingView, prepared by Richard Snow

The weekly chart helps to show the significance of the 1677 level as it kept sellers at bay throughout 2021. Interestingly, the RSI on the weekly is approaching oversold conditions, suggesting that we may see a period of consolidation or even a short-term pullback if 1677 holds in the coming days. However, given the weak fundamentals and strong trend – it is difficult to see any longer-term ascendency in gold meaning further selling, on a break below 1677, appears more likely. 1677 remains key for gold’s next move.

Gold (XAU/USD) Weekly Chart

Source: TradingView, prepared by Richard Snow