At the beginning of this week’s trading, gold futures regained the top of the 1,800 US dollars, driven by the weakness of the US dollar and the divergence of Treasury yields. The yellow metal is also rising as investors prepare for long-awaited US inflation data this week, which may show a slowdown in price growth. The price of XAU/USD rose towards the resistance level of 1790 dollars per ounce and the closest to the psychological top of 1800 dollars. Overall, gold prices have trimmed much of their losses this year, sliding only 1.4% since the beginning of the year.

Silver, the sister commodity to gold, also emerged at the beginning of the week’s trading. Silver futures rose to $20.63 an ounce. Despite notable gains in the price of the white metal by 9% over the past month, it is still down by about 11% over the course of 2022.

Gold has defied conventional thinking by rallying after widespread expectations that the Federal Reserve will maintain its hawkish stance on raising US interest rates amid a strong labor market. Markets are expecting the Fed to raise the Fed funds rate by 75 basis points at next month’s FOMC policy meeting.

The leading US consumer price index for July will be in focus this week. Economists expect the annual US inflation rate to fall to 8.7%, but the core inflation rate, which removes the volatile food and energy sectors, will rise to 6.1%.

Geopolitical tensions linger in the background as well as investors watch China’s response after House Speaker Nancy Pelosi’s visit to Taiwan last week. Beijing swells military exercises in the region. However, Jim Wyckoff, chief analyst at Kitco.com, noted that financial markets are in for “tough summer days,” so trading volumes won’t be as massive as they were at other times of the year.

He added, “We are in the ‘summer days’, when trading volumes dwindle in many markets as investors turn away from the markets and take family vacations. Most of Europe is on vacation during August. Markets are likely to be quieter until after the US Labor Day holiday in early September.”

Meanwhile, gold benefited from the dollar’s decline as the US Dollar Index (DXY), a measure of the dollar against a basket of major currencies, fell 0.18% to 106.42, from an opening at 106.62. A weaker price is beneficial for dollar-priced commodities because it makes them cheaper to buy for foreign investors.

Factors affecting the gold market

The US Treasury market was mixed, with the benchmark 10-year bond yield falling 7.7 basis points to 2.763%. One-year yields rose only 0.5 basis points to 3.274%, while 30-year yields fell 7.3 basis points. The spread between two-year and ten-year Treasuries has widened to nearly -50 basis points. In general, gold benefits from lower returns because it reduces the opportunity cost of holding non-yielding bullion.

In other metals markets, copper futures rose to $3.5845 a pound. Platinum futures rose to $939.80 an ounce. Palladium futures rose to $2,237.150 an ounce.

Today’s XAU/USD Gold Price Forecast:

As I mentioned before, the XAU/USD gold price crossed the top of $1800 an ounce. It will support the bullish trend and warn of more technical longs to test stronger ascending levels, and the next if this happens will be the resistance levels of 1818 and 1832 dollars, respectively. On the other hand, and over the same time period, the bullish momentum will be affected if the gold price returns below the $1770 support level for an ounce. I still prefer buying gold from every bearish level. I expect a relatively quiet trading session today.

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Gold can be bought from every bearish level. 

The price of gold extends its gains with the weakness of the US dollar index DXY, and mixed Treasury yields as markets start in August in the red. The price of XAU/USD gold moved towards the resistance level of 1775 dollars for an ounce, the closest point to the psychological resistance of 1800 dollars an ounce. All in all, gold prices are looking to extend their gains after posting a weekly gain of 4% last week. Coinciding with a weak US dollar, mixed Treasury yields, and a drop in stocks, this could be a major opportunity for the precious metal.

Despite the strong weekly consolidation, the price of gold fell 2% in July and is down about 3% YTD 2022. In the same way the price of silver, the sister commodity to gold, is also trying to keep the winning streak alive. The price of silver rose to 20,265 dollars an ounce. Overall, the white metal enjoyed a 10% increase last week and a 2% monthly jump. However, silver prices are still down more than 13% YTD 2022.

Metal commodities are benefiting from so-called Fed pressure. This means that gold and silver could rise in the direction of the US central bank, which is likely to pivot in tightening efforts. Next year, Federal Reserve Chairman Jerome Powell may slow down the pace of US interest rate hikes and may cut rates to support economic growth in late 2023. Analysts also note that gold and silver jumped on money managers who covered their short positions after initiating a net sell for the first time since 2019.

Commenting on this, Daniel Ghaly, commodities analyst at TD Securities, told MarketWatch: “Money managers cover short positions across gold and silver, but in gold you have another group taking the other side, while in silver it is not.”

All in all, industry watchers note that gold and silver are in oversold territory, so it is possible that the two metals could regain some lost ground. Meanwhile, the metals market is also climbing with lower gains and a declining bond market. Take a look at the drivers of the gold market. The US Dollar Index (DXY), which measures the performance of the US currency against a basket of currencies, fell to 105.51, from an opening at 105.90. The index fell more than 1% last week but rose about 0.4% in July. And from the beginning of 2022 to date, the US index is still up by about 10%.

A lower exchange rate is a good thing for dollar-priced goods because it makes them cheaper to buy for foreign investors.

What else affects the gold market?

The US Treasury market was mostly mixed as the week’s trading opened, with the benchmark 10-year bond yield dropping 1.3 basis points to 2.629%. One-year bond yields were flat, while the 30-year bond yield was also unchanged. Lower Treasury yields are bullish for gold because they reduce the opportunity cost of holding non-yielding bullion.

In addition, the spread between the two-year and 10-year returns is still hovering around -27 basis points.

For other metals, copper futures fell to $3.5375 a pound. Platinum futures were up $11.30, or 1.27%, to $901.10 an ounce. Palladium futures advanced to reach $2,177.50 an ounce.

Today’s XAU/USD Gold Price Forecast:

On the daily chart below, the recent gold price gains contributed to breaking the bearish trend, and the shift will be to the upside if the XAU/USD price tests the psychological resistance level of $1800 an ounce. We expect that the stability of the gold price above the resistance level of 1780 dollars an ounce will support the move to that psychological resistance. Global geopolitical tensions, as I mentioned before, may remain supportive of the gold market despite the tightening trend of global central banks.

As I recommended before, gold can be bought from every bearish level. The closest support levels for gold are currently 1758 and 1740 dollars, respectively. The movement may remain in narrow ranges until the release of the US jobs numbers by the end of the week.

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Looking heavy at $22,236.

Previous BTC/USD Signal

My previous signal on 20^th July was not triggered as the reversals took place beyond the key levels which I had identified that day as probable support and resistance.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades may only be entered before 5pm Tokyo time Tuesday.

Long Trade Ideas

• Go long after a bullish price action reversal on the H1 timeframe following the next touch of $23,266 or $21,449.
• Place the stop loss $100 below the local swing low.
• Adjust the stop loss to break even once the trade is $100 in profit by price.
• Take off 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to run.

Short Trade Ideas

• Go short after a bearish price action reversal on the H1 timeframe following the next touch of $24,372 or $25,000.
• Place the stop loss $100 above the local swing high.
• Adjust the stop loss to break even once the trade is $100 in profit by price.
• Take off 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to run.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

BTC/USD Analysis

I wrote in my previous analysis on 20^th July that the price of BTC/USD was likely to continue rising due to the strong short-term bullish momentum and lack of any foreseeable risk events. This was an OK call insofar as the price rose over the London session, but eventually ended the day lower.

The Bitcoin rally continued over the past week, reaching a new 6-week high last Thursday, but not by much. The price quickly reversed and has been trading downwards ever since. However, the price still remains within a symmetrical bullish price channel but has fallen from an area near the top of the channel.

The price now seems to have reached a pivotal point: the support level at $23,266. This support has not yet broken down, but the price does look heavy here and we could well see a breakdown today. If the breakdown does happen, it could be quite strong as there are no support levels below until $21,449 so the price has plenty of room to fall. The lower trend line of the bullish price channel is well below that horizontal level and trend line analysis can be very useful for an asset as responsive to technical analysis as Bitcoin typically is.

I see the best approaches to Bitcoin today as looking for a long trade from a bullish bounce at $23,266, or if that level breaks down, a short trade below it, ideally from a failed retest of the level from below, with the short entry coming after the price bounces bearishly off $23,266. Shorter-term traders might not wait for the retest and instead just try to sell on short-term rallies as they turn bearish.

Concerning the US Dollar, there will be a release of ISM Manufacturing PMI data at 3pm London time.

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The overall attitude of the market has been one that has gone higher, despite the fact that it is not necessarily a clean market right now

The West Texas Intermediate Crude Oil market has rallied quite nicely during the trading session on Friday as we continue to bang around in a major symmetrical triangle. You can see that I have clearly drawn this on the chart, and the uptrend line continues to offer a bit of resistance. It is worth noting that we are close to the highs from a couple of weeks ago, and at this point, if we were to break above the $111 level, it is likely that the market will continue to go higher.

In that scenario, the market would probably go looking to reach the $115 level, possibly even the $120 level. The market pulling back also makes just as much sense, because of the resistance that we have seen tested multiple times. If we were to pull back, that does not necessarily mean that is time to start selling oil, just that we may have to go looking for value yet again. The 50 Day EMA would be an area that you need to pay close attention to as it has been dynamically supportive more than once.

After that, there is an uptrend line underneath that comes into the picture as well, that is the bottom of the symmetrical triangle. At this point, the market continues to be very choppy, so you need to be cautious with your position size. However, it is probably worth noting that the overall attitude of the market has been one that has gone higher, despite the fact that it is not necessarily a clean market right now as far as a direction or trend is concerned. Notice that the 50 Day EMA continues to rise as well, and when you look at this chart, this is a perfect example of how people typically use moving averages, as it shows a slight “lean to the upside.”

If we were to break down below the uptrend line, which is essentially the $100 level, it is possible that the WTI Crude Oil market goes looking to reach the 200 Day EMA underneath. That would be somewhere near the $90 level, which is of course a psychologically important level, but it is also an area where we had seen a lot of noise back in February. Because of this, it does make a certain amount of sense that we revisit that area, but only if we get a sudden shock to the system. As things stand right now, it looks like it is much easier to go higher.

After four trading sessions in a row, the USD/JPY currency pair moved on its impact, amid profit-taking sales, and it moved towards the 126.92 level. Strongly raising US interest rates to stem record inflation in the United States. The currency pair USD/JPY moved towards the resistance level 128.50 at the time of writing the analysis.

The Fed may be on track to raise US interest rates by more than 200 basis points in 2022 alone, much higher than the Bank of England can do. As for the Japanese central bank, it is far from taking such steps. But for now, the continued deterioration in market sentiment appears to be spurring demand for the dollar. This occurred amid concern from China due to a new outbreak of the Corona virus and the subsequent harsh containment measures, which may impede the path of economic recovery for the second largest economy in the world.

The Japanese yen has fallen along with several other major currencies in this week’s mid-session, but it faces additional risks from the looming Bank of Japan (BoJ) monetary policy decision which many believe will reinforce a wide gap between Japanese government bond yields and America. The Japanese yen rose against the euro and the Norwegian krone on Wednesday but fell against most other major currencies as the forex market pondered the possibility of a disruption to Russian energy supplies to “unfriendly countries”.

A sudden stop in Russian gas supplies to Europe could push the continent into recession. It is difficult to predict the exact impact of such an immediate ban on gas, and it came after news of a halt in gas supplies to Poland and Bulgaria after companies operating there refused to comply with the terms of the Kremlin gas ruse in exchange for the ruble, which led to speculation about similar measures that will affect other countries in the future.

Japan is one of the “unfriendly countries” that engage in sanctions against the Russian government and is also, to a similar extent as Europe, highly dependent on energy imports from Russia, which is why the Japanese yen has fallen. Wednesday’s losses mirrored what was considered a strong performance for the yen, which appeared to have taken respite from weeks of heavy selling when US government bond yields tumbled over the course of Monday and Tuesday.

However, the burden of these returns – or the gap between them and their Japanese equivalent – will return to focus Thursday when the Bank of Japan prepares to announce its latest monetary policy decision. Commenting on this, John Hardy, FX analyst at Saxo Bank, said: “While very few expect a turnaround, it would not take much to suggest that the pressure on the BoJ through the weak currency is becoming too strong to ignore.”

“Even a hint that the bank is considering tightening without details may be enough to spur a rally in the Japanese yen, but clarifying that the bank is willing to manipulate the maximum yield policy on 10-year JGBs is likely to lead to a sharper move,” he added.

Overall, the BOJ’s policy of seeking to maintain the 10-year JGB yield at around 0.10%, while imposing a fixed cap at 0.25% for its long-term borrowing costs benchmark, has left the JPY vulnerable to a sharp increase in US government bonds. Revenues seen in recent months.

The depreciation of the Japanese currency linked to the yield differential has prompted repeated expressions of concern from the Ministry of Finance and fueled market speculation about a possible intervention in order to calm the decline of the yen.

According to the technical analysis of the pair: On the daily chart, the price of the USD/JPY currency pair is still moving in an upward direction. The formation of the bullish flag supports the idea of ​​moving towards the 130.00 psychological resistance as soon as possible, as the US dollar is still stronger than expectations of raising US interest rates by rates which are strong in 2022. Breaking the resistance 128.85 supports the move towards that top. On the other hand, there will not be an initial break of the trend without the currency pair moving towards the 125.20 support level. The US dollar pairs will be affected today by the announcement of the US economic growth rate, in addition to the number of weekly jobless claims. In addition to the extent to which investors are willing to risk or not.

For more than a month, the price of the USD/JPY currency pair has been moving in a strong uptrend range amid a strong investor abandonment of the Japanese yen. This is one of the most prominent safe havens for investors in times of uncertainty and was supposed to make solid gains as the Russian/Ukrainian war continues. Investors balanced between the future of the US Federal Reserve policy, amid a distinguished performance of the US economy, and the lax policy of the Japanese central bank and the continued provision of stimulus to the Japanese economy in the face of the effects of the epidemic and, most recently, the Russian war.

The gains of the dollar-yen pair reached the resistance level of 126.68, the highest in 20 years, and settled around the 126.30 level at the beginning of this week’s trading. This stimulated the bulls and expectations for the future to move towards the next historical psychological resistance 130.00 if the currency pair’s gains factors continued and profit-taking did not start.

The US dollar is still reaping gains, with expectations of more US interest rate hikes during 2022 to face the fiercest levels of inflation in the country in 40 years. On the other hand, pressure on the Bank of Japan comes from two sources. First, the rise in global rates has pushed the 10-year Japanese government bond yield to nearly 0.25% yield curve control ceiling. There is something to be said for the IMF’s advice to target a shorter maturity period.

Secondly, the general inflation rate in Japan was on the rise, but the main reason for this was food and fresh energy. In March 2021, the annual rate of the headline CPI was -0.4%. It is expected to rise to 1.0% in March 2022 when it is announced this weekend. A year ago, if food and fresh energy were excluded, the Japanese CPI was flat. Last month, it was expected to be at -0.8%. Starting with the April report, the base rate will rise. Moreover, it will turn positive with lower prices for wireless services last year compared to the 12-month comparison. As a result, real interest rates will fall even more.

It is common for observers to argue about the race to rock bottom, as everyone is looking for weaker coins, however this is not true. What is true is that central banks usually want the currency to be consistent with the direction of their monetary policy. A strong currency could dampen efforts to ease financial conditions, for example. Likewise, currency weakness when financial conditions tighten is counterproductive.

Companies don’t always want a weaker exchange rate. Let’s take Japan, for example. The Japanese yen fell to its lowest level against the dollar in 20 years. A recent Reuters poll showed that three-quarters of Japanese companies say a weak yen is hurting their businesses. A common fear is that the depreciation of the yen will weaken consumption and capital investment. Almost half believe that exchange rate developments will undermine profits, more than a third said they will harm profits “to some extent”, and one-eighth said the impact will be “significant”.

USD/JPY Technical Analysis: Near term and hourly performance, USD/JPY appears to have pulled back recently to complete the channel breakout before assuming a sideways trend formation. This indicates a reversal of the uptrend in the market. Therefore, the bears will target short-term profits at around 125.95 or lower at 125.50. The bulls are looking to resume the upside by targeting profits at around 126.70 or higher at 127.00.

In the long term and according to the performance on the daily chart, it appears that the USD/JPY is trading within the formation of a sharply bullish channel. This indicates a strong long-term bullish momentum in the market sentiment. Therefore, the bulls will target long-term profits at around 127.94 or higher at the next psychological resistance of 130.00. On the other hand, the bears will target potential pullback profits at around 124.09 or lower at 121.56 support.

The rise in US inflation levels coincided with the decline in US Treasury bond yields. Therefore, the gold price had the opportunity to move upwards strongly towards the resistance level of 1979 dollars an ounce, its highest in a month.

Gold futures rose after price inflation in the US was hot again in March. Despite expectations that the Federal Reserve will be bolder about US interest rates, the yellow metal is still heading towards its highest end in about a month. Gold prices have been in a tailspin during last month’s trading, rising nearly 3%. Since the beginning of the year 2022 to date, the price of the yellow metal has increased by about 8%.

As for the price of silver, the sister commodity to gold, it is looking to top $26. Silver futures rose to $25.74 an ounce. Overall, the price of the white metal increased by more than 5% over the past week, bringing its gains in 2022 to more than 10%.

Precious metals prices, which are usually a safe haven in an inflationary environment, rose in the wake of the March inflation data.

According to the US Bureau of Labor Statistics (BLS), annual US inflation came in at 8.5% last month, beating economists’ expectations of 8.4%. This was also up from 7.9% in February. Core inflation, which is decimating the volatile food and energy sectors, also jumped to 6.5%. But market analysts are divided over whether this is the peak of inflation or if there are further increases on the horizon for next month’s report. At the moment, there are two immediate factors that can dampen inflation: China and the Federal Reserve.

Experts stress that inflation could decline if the US central bank becomes bolder about interest rates. For his part, St. Louis Fed President James Bullard wants to see the benchmark rate at 3.5% by the end of the year. Minutes from the Federal Open Market Committee (FOMC) last month revealed that the institution plans to raise the federal funds rate by 50 basis points in May and June.

Moreover, the lockdowns in China are expected to exacerbate the global supply chain crisis. Experts say Beijing needs to accept that COVID-19 will never go away and that putting important financial centers under lockdown will not achieve its COVID Zero strategy. If the Chinese leadership accepts this, inflation may weaken.

Gold is usually sensitive to higher interest rates because it raises the opportunity cost of holding non-returning bullion.

Precious metals’ gains capped the dollar’s rally as the US Dollar Index (DXY) rose to 100.09, from an opening at 99.93. A stronger profit is generally a bad thing for dollar-priced commodities because it makes it more expensive for foreign investors to buy it. US Treasury yields were red across the board, with benchmark 10-year yields falling to 2.678%. The yield on the one-year note fell to 1.735%, while the yield on the 30-year note fell to 2.785%.

Relative to the prices of other metals, copper futures rose to $4.7115 a pound. Platinum futures rose to $979.20 an ounce. Palladium futures fell to $2365.00 an ounce.

According to the technical analysis of gold: The movement of bulls in the price of gold to breach the resistance of 1975 dollars an ounce may increase the strength of expectations to move towards the next historical psychological top of 2000 dollars an ounce. This may give the bulls an impetus to break through stronger historical ascending levels. On the other hand, according to the performance on the daily chart, the breach of the 1920-dollar support will be important to shift the bullish outlook, and so far, I still prefer buying gold from every descending level as long as global geopolitical tension and the epidemic are ongoing factors. Gold is a traditional and historical safe haven for investors from any turmoil.

Start counting on choppy behavior in these markets

The S&P 500 has pulled back during the trading session on Wednesday to reach the 4600 level before bouncing a bit. At this point, the market looks as if it is trying to hang about and decide where to go next, as the market had gotten so overstretched. The market remains very noisy, but the fact that we found support at a previous resistance barrier is a good sign.

If we were to break back below the 4600 level, then we could go looking towards the 4500 level. The 4500 level is an area that a lot of people will pay close attention to and an area that could kick off a bit of a selling opportunity. That being said, the market is likely to see a lot of noisy trading in this area, especially as we have the jobs number coming out on Friday.

The market has been parabolic for some time, and I do not trust these types of moves. However, I also know that the US indices are not made to be shorted, because the markets are measured via a market cap, and therefore just a handful of stocks can send this index higher, regardless of what is going on underneath. In fact, it is quite common to see the index rally as huge swaths of stocks decline. That was the case before we started selling off quite drastically, and therefore you should watch some of the smaller stocks for a bit of a secondary indicator. Nonetheless, this is a market that certainly looks as if it is trying to find its footing, and a couple of days going sideways could work off a lot of the froth in order to make it a bit more viable of an uptrend.

The overall health of the market is questionable, simply because there are a lot of moving pieces out there that could suggest negativity, but quite often the market simply ignores this. I think we may be in one of the situations again because there is a huge disagreement amongst bond market traders and stock traders as to whether or not the Federal Reserve is going to save everybody again.  I think the only thing you can count on is a lot of choppy behavior. If we break down below the 4500 level I will reassess the situation.

I think that as long as we stay above the support underneath, value hunters will continue to push the market.

The S&P 500 initially pulled back in the futures market on Monday, only to turn around to reach the upside. The 4500 level underneath continues to be an area of interest, as it has been both support and resistance previously. We now look as if we are threatening the previous double top that sits at the 4585 level, which will be the last vestiges of resistance.

If we were to break above the double top at that level, it would have this market breaking to the upside, perhaps reaching all-time highs. Iif the bears cannot protect that area, it will come down to fundamental noise, which would have a long way to go in pushing this market back down. At this point, the Russians are even starting to soften their stance on demands for peace in Ukraine, so that could be yet another reason to think that things are turning around for a bigger move.

Regardless, even if we do continue to see upward mobility, the reality is that we are a bit stretched at this point, so it makes a certain amount of sense that we would get a little bit of a pullback. Underneath, near the 4450 area, there does seem to be a significant amount of support, not only based upon the previous several sessions but the fact that we have the 50-day EMA sitting there, as well as the uptrend line.

There is no such thing as an easy trade at this point, because the markets have been running on pure emotion for several weeks. Now that we have all but wiped out the concerns of the war in Ukraine stretching out across the border into other parts of Europe, we start to focus on the idea of economics. It appears that Wall Street no longer believes that the Federal Reserve has the guts to tighten the economy, but the Federal Reserve still maintains that it does. In this scenario, somebody’s going to lose, but right now it looks like the momentum is most decidedly to the upside. However, you should keep in mind that momentum seems to be a fickle thing and will continue to be a major issue at times. I think that as long as we stay above the support underneath, value hunters will continue to push the market.

The next few months are going to be very difficult and very noisy, and as a result, it looks likely that the markets will need to be treated with extreme caution. 

The S&P 500 initially fell on Friday and looked as if it was going to struggle for a bit, only to save itself at the end of the session. This is quite typical as institutions come in late in the day and pick up stocks. That being said, the market is more likely than not going to face a bit of resistance between here and the small double top that sits at the 4585 handle. The area should be difficult, but it is going to be interesting to see whether or not we can break above there. If we do, then all of the negativity is suddenly gone.

What is interesting is that bond yields continue to race higher, as the bond market does not seem to be as excited about the prospect of the Federal Reserve backing down like Wall Street is. Most Wall Street pundits think that the Federal Reserve will not dare raise interest rates in this inflationary environment, but Jerome Powell may have no choice. If that is the case, it will absolutely crush the stock market, especially if he has to do it rapidly in an environment that is very dangerous.

On the other hand, if Jerome Powell sides with the institutional bankers again, then it is very likely that inflation will run hot, and stocks will be bought as an inflation hedge. This would not be conducive to an economy that allows for a lot of profits for companies, but it has been a while since the stock market had anything to do with that. It is more about liquidity at this point, and the more liquidity there is, the higher these markets tend to go.

It is all about monetary flow, and it is likely that it comes down to what the Federal Reserve does. The next few months are going to be very difficult and very noisy, and as a result, it looks likely that the markets will need to be treated with extreme caution. The consolidation just underneath should be supportive, but if we were to break down below there, the 4450 handle will be the gateway to lower prices. Ultimately, this is a market that I think will find its way higher in the short term, but it is only going to take just a little bit of negativity to turn things around.