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Looking to the Futures

Gold Market Awaits Fed Guidance

Fundamentals

The market for gold has been mixed over recent sessions, with several key factors keeping trading in a narrow range around the psychological $1800/ounce levels.  The market anxiously awaits commentary from the FOMC regarding their stance on interest rates heading into the back half of 2021. With members hinting discussions had begun in earnest regarding tapering monetary support and buy back policies, commentary regarding the committee’s direction from Fed Chairman Powell has led to tight trading and consolidation in the market.  Lukman Otunuga, senior research analyst at FXTM, wrote, “A hawkish central bank could deliver a heavy blow to zero-yielding gold. However, a meeting filled with doves may boost the precious metal’s allure, possibly sending prices higher.”

The dollar index has remained steady, below recent peaks, also waiting for direction from the FOMC.  The committee’s reaction to rising prices being offset by the increasing number of infections of the more contagious Delta COVID variant will shape the direction of both markets.   The scheduled announcement of advance estimates of GDP on Thursday may also influence trading as it provides a closer look at how the American economy is reacting to on-going COVID concerns.

In the ETF marketplace, investor sentiment has leaned bearish in July. SPDR Gold Trust, the world’s largest gold exchange-traded fund, has announced their holdings to be 1025.64 tons, its lowest since early May.  The fund has seen outflows of approximately 20 tons for the month.

 

Technicals

Looking at August Gold 2021, GCQ21, shows the 20-day, 50-day and 200-day moving averages continuing to consolidate.  The MACD has trended negative in the recent trading sessions and is currently in the -2 range.  RSI is trending down in recent sessions indicating a slight bearish attitude.

Trading Central Daily Technical Analysis have today’s support levels at 1790.00 and 1785.00 and resistance at 1813.00 and 1820.00.

 

20-Day SMA       1808.01                                

50-Day SMA       1821.886

200-Day SMA    1816.199

14-Day RSI          49.027

Contract Specifications

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