Testing support from last year’s August
Gold’s decline from the upper 1800s has stopped at 11 months old support at 1740$ per ounce. Moreover, it can be clearly seen that gold is at this level flat and volume is cumulating. Prognosis and predictions about the next gold move are wild due to markets’ volatility. Therefore, it is better to look at the traded volume. The main sentiment remains negative for bullion, as we have informed in the previous article.
The fact is that the commodity has stopped its decline at the support from last August and from that time it is flat. A significant accumulation of volume can be seen at this level. This means a possible big move for gold and it does not matter which way. The current situation around the price 1745$ is interesting. If the price will go under the current low of 1726.1$ and the price action will confirms this breakthrough, the next support could be around 1692$.
You may be also interested in: Market Outlook: Bitcoin, Oil WTI and DAX
4 hours chart of GC (Gold Futures), Support from August 2021. Source: Author’s analysis
On the other hand, the closest resistance could be in area 1760$ – 1775$. The small stop on the way down from the beginning of the month. Moreover, the volume has accumulated there and the price 1768.1$ represents the monthly VWAP (Yellow line). To add, weekly VWAP is at 1761.1$.
30 minutes chart of GC, Resistance area. Source: Author’s analysis
The negative sentiment persists
Gold is hurt by the sentiment. Last week’s data from the labor market shows that Fed has to continue its monetary policy. Based on data from CME FedWatch Tool, there is a 95.4% probability that the central bank will raise interest rates by 75bp. Therefore, there are reasonable concerns about another decline in the price. The next Fed meeting is in two weeks, the 27th of July. But inflation data from the US will be released this Wednesday. This means another possible strong news for gold’s move.