31 July
gold and silver market
Spot Gold rebounded on Friday after experiencing a sharp decline the day before, supported by a slight drop in the dollar due to indications of easing U.S. inflation, leading to speculation that the Federal Reserve might end its monetary tightening measures.
Data released on Friday showed a considerable slowdown in U.S. annual inflation for June, with the personal consumption expenditures (PCE) price index rising by 0.2% last month, according to the Commerce Department.
The core PCE, which is closely monitored by the Fed, met expectations and didn’t come as a surprise. Additionally, the weaker dollar today is providing some upward momentum for gold.
Both the U.S. central bank and the European Central Bank raised interest rates this week and hinted at the possibility of further tightening.
On the daily chart, the RSI indicator started to edge higher after dropping to 50 on Thursday, suggesting that investors remain hesitant to bet on a sustained decline in the Gold price. On the upside, the 100-day Simple Moving Average (SMA) and the 20-week SMA create robust resistance at $1,970. Although XAU/USD closed above that level midweek, it failed to hold there. Hence, buyers may wait until that level is confirmed as support. In that case, $1,980 (static level) serves as interim resistance before reaching the psychological level of $2,000.
On the downside, an essential support area lies at $1,945/$1,950, where the Fibonacci 23.6% retracement level of the long-term uptrend, 20-day SMA, and 50-day SMA converge. If XAU/USD falls below this region and starts using it as resistance, sellers might take action, potentially leading to an extended decline towards $1,920 and $1,900 (Fibonacci 38.2% retracement, 200-day SMA).
