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Gold Technical Analysis: Gold’s Stability Remains Cautious


  • With the start of this week’s trading, the XAU/USD gold price tried to maintain attempts to rebound to the upside, which pushed it towards the resistance level of $1967 an ounce.
  • It recovered from the losses of the recent selling operations that pushed it towards the support level of $1926 an ounce.
  • The recent US dollar losses provided a positive impetus for the gold market.

The combination of geopolitical and macroeconomic uncertainty will keep the gold market in focus for several more years, said Ruth Crowell, chief executive of the London Bullion Market Association (LBMA), on Monday. In an interview with Goldreporter, Crowell explained that the reason why the price of gold hasn’t gone up has to do with the strong US dollar, which is a safe-haven alternative asset. She added that the other big driver is the policy of central banks, in particular the spectacular central bank purchase program that began in 2022 and has continued until this year. Some of the major challenges facing the gold industry today and recent developments in the gold market are also discussed in the interview.

Stock market indices fell on Monday as concerns about the global economy and the path of rates sapped the strength of a sharp rally in the second quarter. A one per cent drop in Europe’s main equity measure has swept through almost every industry. Among the largest individual moving companies, shares of Sartorius AG fell 15 percent after issuing a warning about larger-than-expected earnings. In Asia, disappointed hopes for more stimulus sent Chinese technology stocks lower.

With increasing uncertainty about the path of prices, traders are oscillating between the temptation of a rally and the concern that it has been exhausted and that the market has become overbought.

Overall, the rally on Wall Street has now erased more than a year of losses inflicted by the Fed, as equities, volatility and the dollar shake off the impact of 10 rate hikes. The S&P 500 capped its fifth straight week of gains and is now higher than it was on the day the Fed launched its campaign.

This week, US Federal Reserve Chairman Jerome Powell will present his semi-annual report to Congress on Wednesday. Speakers this week include St. Louis Federal Reserve President James Bullard and his counterparts in New York and Chicago. Overall, Fed policymakers kept US interest rates unchanged at their latest meeting, but warned of further tightening ahead. Last week’s decision came with expectations that borrowing costs would rise by 5.6 percent in 2023, which means a quarter-point or half-point increase in the interest rate before the end of the year.

According to the performance on the daily chart below, the XAU/USD gold price still tends to decline. The US dollar was negatively affected by the US Federal Reserve’s policy decisions to give gold some stability and prevent a further collapse below the $1926 support level, which it tested last week. At the beginning of the week’s trading, the price of gold stabilized around the level of 1958 dollars an ounce. The bulls will not control the trend again without moving towards the $1972 and $1985 resistance levels, respectively, which in turn moved the price towards the $2000 psychological resistance level.

On the other hand, if the price of gold returns below the support level of 1926 dollars an ounce, the losses of last week, the bears may find a strong opportunity to move further downwards, and the next support levels 1910 and 1885 dollars will be the strongest targets. I still prefer to buy gold from every downward level. The price of gold may remain in waiting mode until the markets react to the testimony of US Central Bank Governor Jerome Powell and the policy decisions of the Bank of England and the Swiss central bank.

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