Gold price remains confined in a familiar range, just above $1,700 mark.

Gold price struggles to gain any meaningful traction and remains confined in a range.

The ongoing USD profit-taking slide continues lending some support to the commodity.Hawkish major central banks, the risk-on impulse acted as a headwind and caps gains.

Gold price attracts some dip-buying near the $1,705 region on Tuesday, though seems to struggle to capitalize on the modest intraday gains. The XAUUSD, so far, has struggled to gain any meaningful traction and remains confined in a familiar trading range, just above the $1,700 round-figure mark.

Gold price drawing support from sustained USD selling.The US dollar prolongs its retracement slide from a two-decade high touched last week, which, in turn, is seen as a key factor offering some support to the dollar-denominated gold. In fact, the USD Index has dropped to its lowest level since July 6 amid receding bets for a massive 100 bps rate hike move by the Federal Reserve in July. Several FOMC members signalled recently that they will likely stick to a 75 bps rate increase at the upcoming policy meeting on July 26-27.

US housing market data does little to impress USD bulls.The mixed US housing market data, meanwhile, is doing little to impress the USD bulls or provide any meaningful impetus to the gold price. The US Census Bureau reported that Housing Starts declined by 2% to a seasonally adjusted annual rate of 1,685,000, while Building Permits fell by 0.6% in the same period following the 7% contraction reported in May.

Aggressive tightening plans by major central banks act as a headwind

That said, the prospects for a more aggressive move by major central banks continue acting as a headwind for the non-yielding yellow metal. The Fed is still expected to deliver a larger rate hike later this year to curb soaring inflation, which accelerated to a four-decade high in June. Adding to this, the European Central Bank (ECB) reportedly will discuss whether to raise interest rates by 25 bps or 50 bps to tame inflation at its upcoming policy meeting on Thursday.

Moreover, the minutes from the Reserve Bank of Australia policy meeting released earlier this Tuesday indicated that further increases in interest rate will be needed to return inflation to the target over time. This comes a day after Bank of England policymaker Michael Saunders said that the current tightening cycle may still have some way to go and the benchmark rate could reach 2% or higher next year.

Gold price, so far, has struggled to register any meaningful recovery from a nearly one-year low touched last week, suggesting that the near-term risks remain skewed to the downside. Hence, any attempted recovery beyond the $1,725-$1,726 immediate resistance might still be seen as a selling opportunity. This, in turn, should cap the XAUUSD near the $1,734-$1,735 horizontal resistance. Some follow-through buying might trigger a bout of short-covering and lift the commodity towards the $1,749-$1,752 supply zone.

On the flip side, last week’s swing low, around the $1,698-$1,697 area, might continue to act as immediate support. A convincing break below would make the XAUUSD vulnerable to testing the September 2021 low, around the $1,787-$1,786 region. Gold price could then extend the downward trajectory towards 2021 yearly low, near the $1,677-$1,676 area.

EURUSD climbs to 1.0250 area as dollar selloff continues

EURUSD has extended its daily rally toward the mid-1.0200s during the American trading hours on Tuesday. With Wall Street’s main indexes posting impressive gains, the dollar struggles to find demand and the US Dollar Index loses nearly 1% on the day.


GBP/USD rises to fresh 11-day highs near 1.2050

GBP/USD has continued to push higher in the second half of the day and touched its highest level in more than a week near 1.2050. BOE Governor Bailey acknowledged on Tuesday that a 50 bps rate hike will be on the table next week, boosting the British pound.


Gold holds in positive territory above $1,710

Gold has regained its traction after having dipped below $1,710 on Tuesday. The broad-based selling pressure surrounding the dollar allows XAUUSD to hold in positive territory but rising US Treasury bond yields limit the pair’s upside for the time being.

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