· Gold Price Forecast: XAU/USD gathers strength for the next leg lower towards $1800
Gold is edging lower but holding above $1,800. In the opinion of FXStreet’s Dhwani Mehta, a corrective decline is likely to resume amid risk-off mood and a bear pennant.
“Gold is defending the 50-Simple Moving Average (SMA) at $1812 for now but remains at a risk of additional downside. The recent price action has taken the shape of a bear pennant on the said time frame, signalling caution for the optimists. A sustained break below the 50-SMA, which also coincides with the bear pennant support, will open floors towards the $1800 level.”
“A four-hourly candlestick closing above the falling trendline resistance at $1817 will invalidate the bearish continuation pattern. The downward-pointing 200-SMA at $1819 could challenge the recovery momentum.”
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· “The dollar strength is limiting gold’s upside and sort of remains one of the key headwind,” said Harshal Barot, a senior research consultant for South Asia at Metals Focus.
“There are emerging concerns about the Delta variant and its impact on global economic growth. So, primary safe-haven flows are also going into the dollar and bonds.”
· Sentiment in wider financial markets remained weak as investor risk appetite was soured by growing inflationary pressures and a relentless surge in coronavirus cases.
· Many countries, particularly in Asia, are struggling to curb the highly contagious Delta variant of the coronavirus and have been forced into taking lockdown measures.
· “The loss of upside momentum shifted the risks for gold to the downside,” said Jeffrey Halley, a senior market analyst at OANDA.
“For now, though, and despite the noisy price action, gold remains hemmed in by its 100- and 200-day moving averages at $1,792 and $1,826 an ounce, respectively.”
· Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.6% to 1,028.55 tonnes on Friday, the lowest since May 14.
· U.S. senators drop tax enforcement from bipartisan infrastructure bill -Portman
U.S. lawmakers trying to salvage a $1.2 trillion bipartisan infrastructure bill have dropped a provision to beef up tax enforcement, Republican Senator Rob Portman said on Sunday, setting aside a significant revenue-raising measure.
· China frictions steer electric automakers away from rare earth magnets
As tensions mount between China and the United States, automakers in the West are trying to reduce their reliance on a key driver of the electric vehicle revolution - permanent magnets, sometimes smaller than a pack of cards, that power electric engines.
Most are made of rare earth metals from China.
· China likely to keep lending benchmark LPR steady in July, outlook divided
China will likely keep its benchmark lending rate unchanged at its July fixing on Tuesday, a small majority of respondents to a Reuters survey believe, but there are growing expectations for a cut after a surprise lowering of bank reserve requirements.
· South Korea poised to kick-start Asia's monetary tightening
South Korea is set to be the first Asian economy to raise interest rates from pandemic-era lows as its hawkish, outgoing central bank governor steps up efforts to stamp out any incipient property bubbles or household debt stress.
Bank of Korea Lee Ju-yeol surprised financial markets last week, when policy rates were kept at record lows but he signalled they could rise as early as August, at the next policy review.
· Japan maintains economic assessment in July report
Japan kept the overall assessment of its economy unchanged for a second straight month in July, retaining the view that conditions remain severe due to the impact of the coronavirus pandemic.
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