Gold Analysis. XAUUSD: $1717/1666 or $1777/1818? | 08.07.2022

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    Spot Gold (XAUUSD) price is back to $1735 zone, where it was on 29 June, 2021. Recession fears acted as a tailwind for the XAUUSD as the focus still remains on the US NFP report. Aggressive Fed rate hike bets is keeping the USD elevated near a 20-year high, meanwhile Gold Price is struggling to register any meaningful recovery from the YTD low.

    Previous Gold Analysis Review

    Buying and Selling Spot Gold (XAUUSD) at the key price entry levels mentioned in my analysis dated 06.05.2022 and 03.06.2022 with a target of net average profit in each set: in last two months gave good results: ($) 1836, 1818, 1808, 1777, 1735. XAUUSD CMP $1735.

    Figure 1: Crash scenario published in my analysis dated 03.06.2022.

    Figure 2 PRMTD zones with a target of 1782 was highlighted by us on 03.06.2022 in our analysis.

    BUY/SELL STOPS | BUY/SELL LIMITS: TARGET NAP ( Net Average Profit):                         

    S2 ZONE 1847 | DOWN TREND (Below 1842)  : 1836/1818/1800/1777 buy limits

    On 03.06.2022: I suggested under the Bearish Scenario: Gold Stops: $1836/1818/1777, once again? If the bearish momentum extends, gold price may fall further towards 1836 (after 1842) with 1818/1777 as final destination, if Gold crash halts at 1836 or 1818 zone a reversal can be expected with a RT 23.6 on M5 and M15 30% RT before/in next 12 trading days.

    Result: Gold touched the mark of 1818-1808-1777-1735 in June and first week of July, and retraced higher than M1 M5 M15 23.6 Fib levels, before crashing lower – proving perfect buy entries at the above specified price levels.

    Read June NFP Day: 03.06.2022 analysis here.

    XAU Fundamental Analysis | Current market price $1735 | 08.07.2022

    Gold Price is in a downside consolidation after hitting nine-month lows. Gold traders are facing barricades at around $1,750.00 amid cautious trading added with risk-on mood sentiments over the US NFP. The DXY crossed the mark of 107.00 once again today morning, though in this week, risk sentiment improved alongside reports of China stimulus, however an unexpected negative shift in risk sentiment on news that ex-Japanese Prime Minister Shinzo Abe was shot in the chest at an election campaign speech in Nara. This incident rekindled the demand for the US dollar as a safe-haven asset, which capped the renewed uptick in the yellow metal. The risk-off flows returned, reflective of the fresh weakness in the S&P 500 futures and the US Treasury yields.

    The NFP report is expected to show that the US economy added 268K jobs in June, down from 390K in the last month. The unemployment rate, however, is expected to hold steady at 3.6% during the reported month. The data would influence the near-term USD price dynamics, which, along with the broader risk sentiment, should provide some support to the gold price. The lack of any meaningful buying interest, however, suggests that the near-term bearish trend might still be far from being over hinting the price zone of $1717/$1666 ahead.

    Why is GOLD so important?

    There are three big reasons that gold is the most important precious metal in the world:

    • Central Banks hold enormous amounts of gold as part of their official reserves.

    • In times of risk aversion, traders and investors stop thinking about “return ON capital” and concentrate on “return OF capital”. This shifts investors away from risky assets to the security that gold has typically offered.

    • Perhaps the most important economic indicator, Inflation, can affect the demand for gold as it is seen as a hedge against inflation’s erosion of a currency’s buying power.

    Collectively, at the end of 2021, central banks held around 35,500 metric tonnes of gold: approximately 20% of all the gold ever mined. They buy and sell large amounts of the metal based on their future expectations for the economy. Central Banks may have the power to influence the price of gold more than any other factor out there.

    Inflation Dynamics

    Inflation erodes the value of savings over time and decreases the burden of debt to the borrower over time.

    The triggers for inflation typically include:

    • Low unemployment.

    • Stronger economic activity.

    • Central Bank spending.

    • Government spending.

    • Increases in commodity prices.

    • Increases in workers’ wages.

    Investors actively seek “tangible goods” as a hedge against inflation. There is also a psychological component to this behaviour: currencies, stocks, bonds and ETFs are all “intangible” investment vehicles. They are all “pieces of paper” at the end of the day. So, when the outlook gets gloomy, such as periods of very high inflation, investors tend to search for safety in “hard assets”. However, like currencies, gold does not trade on a single driver all the time. Depending on the state of the markets, each driver can come into play. Then, another one takes its place equally as fast.

    Figure 3: Co-relations.

    US10YT: 2.974 | XAUXAG ratio crossed 90.00 mark, XAUUSD reversed from 1836, 1818 mark as soon as DXY started rising from 103.500 and 106.300 mark.

    How to trade Spot Gold XAUUSD on NFP data today?

    XAUUSD Bearish Scenario: $1717/1666, once again?

    If the bearish momentum extends, gold price may fall further towards 1666 zone (after 1721) with 1717/1700/1685/1666 as next stops, if Gold crash halts at 1717/1666 zone a reversal can be expected with a RT 23.6 on M5 and M15 30% RT before/in next 9 trading days.

    XAUUSD Bullish Scenario: $1777/1818, once again?

    If the Bullish momentum pushes Gold price across $1751 barrier, $1777 and $1796 (1808 zone) can be the next target for Gold, opening way to $1818.

    Heading into the NFP showdown today, gold price is under a price trap of 1751-1735 zone, as investors are less hesitant to place fresh bets due to ongoing high volatility based price movements. The US NFP will emerge as one of the main market driver for gold price today.

    Gold Technical Analysis | Current market price $1735 | 08.07.2022

    There are Gold Price Key Indicators, Factors, Price Zones & SR (D1) Levels to watch:

    PRSR ZONE MN BASED TRADING SCENARIOS

    Figure: 4: PRSR zone MN | C/R RT zones MN TF.

    Figure: 5: PRSR zone D1 | C/R RT zones D1 TF.

    Gold trading strategy

    • Observe price at US OPENING SS1 and then US SS2
    • Observe S3/S4/S5 zone and R2-R3 zone for reversals/retracement, Target NAP
    • Do not enter between the pivot zone
    • Observe: FIB 23.6% on M5 and M15 TF for NAP target price after 30/60/90/120 minutes of NFP

    Price of Focus (POF)

    Crash scenario: D1

    S3 – 9/12 RT NAP

    S4 -6/9/12 RT NAP

    S5 -6/9/12 RT NAP

    Rise scenario: D1

    R2+6/9 RT NAP

    R3+3/6 RT NAP

    R4+6 RT NAP

    Implement RM till 30 after 20/45/90 min. and price gap 12/18/24 after NFP

    Implement GR/SM  after $25/40 price movement from CMP at NFP data

    Golden Ratio based money management should not be used at least till $24 price movement in any direction, if SM needs to be ignored. 

    Figure 6 W1 GRTP MTD PRSR MN Price Zones.

    Kindly observe the crucial limits/stops levels mentioned by me in this analysis in addition to possible crash and rise zones highlighted in W1 D1 both TF.

    Today, I will prefer to BUY session/daily lows below Support 3 and 4 zone (6/9/15 pattern) S5 crucial, and I will prefer to SELL above Resistance zones 2 and 3 (D1-6/9/15) with a target of NET average profit, if fundamentals support and favour the same.

    Movement of 25/40 or 60 dollars on Gold price is not something unexpected nowadays, and a surprise on Monday during early trading hours can not be ruled out too, so closing all positions today in net average profit is always the best trading strategy for every trader who wants to safeguard his principle.

    I expect V pattern in next 9 trading days. XAUUSD CMP $1735

    D1 TF PRSR: BUY/SELL STOPS | BUY/SELL LIMITS: TARGET NAP200P ( Net Average Profit):                         

    S4 ZONE 1717 | DOWN TREND (Below 1721): 1717/1707/1685/1666/1636 BUY LIMITS

    R2 ZONE 1750| UP TREND (After 1758) : 1777/1808/1818 SELL LIMITS

    It is always wise to first PLAN THE TRADE, and then TRADE THE PLAN! Hence, it is suggested to first observe the crash or rise with specific zones and levels in mind on the basis of various fundamental and technical parameters mentioned above, before entering a trade in a specific direction with a target of net average profit in a specific set of trades.

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    Price chart of XAUUSD in real time mode

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