The price of gold soared to $1,812.44 after the US dollar declined 0.27 percent by Friday’s closing, according to the DXY index.
With the advance in US Treasuries running out of steam and global stock markets leveling off, DXY lost its footing from highs of 92.541 to lows of 92.090 as risk appetite returned.
Profit-taking ahead of next week’s release of critical US inflation and retail sales data is also thought to have weighed on the US dollar on Friday.
As a result, the commodity complex is currently bidding for the open.
“Commodities saw a rollercoaster ride last week due to the shifting focus of markets.” They did, however, sustain a bullish trend, with the ANZ China Commodity Index finishing the week up 0.5 percent,” according to ANZ Bank analysts.
The CRB index has also increased by 1% after a sharp retreat from the monthly highs.
This puts it in an excellent position to start the week optimistic, supporting commodity-linked currencies like the Australian dollar.
Meanwhile, the US dollar has been ruffled recently as a result of data showing that the number of Americans submitting new unemployment claims increased unexpectedly last week.
According to the data, the labor market recovery from the COVID-19 epidemic is still rough.
Simultaneously, the European Central Bank has contributed to the dollar’s decline.
Last week, the European Central Bank (ECB) announced a new inflation target on Thursday, which pushed the euro higher and created a less optimistic environment for the dollar in the short term.
From here on out, the sentience will be if the Minutes of the US Federal Reserve’s June policy meeting, which showed that Fed members agreed they should be ready to act if inflation or other dangers materialized, dominates the sentient. US data will also be important this week in this regard.
The Core Consumer Price Index and Retail Sales MoM will be crucial indicators.
‘We warn against extrapolating, in line with Fed officials’ citation of “transitory” factors, but another jump in used vehicle prices, combined with reopening-related gains in airfares and hotel rates, presumably led to another substantial rise in the CPI,’ TD Securities analysts said.
“Retail sales, on the other hand, were probably close to flat; they have slowed since their stimulus-fueled 11.3 percent m/m increase in March.”
This should keep the US dollar supported for the rest of the week, deterring bears from jumping in too soon if the news elevates the inflation risk tone again.
Gold has now reached the 38.2 percent Fibonacci retracement of the mid-June plunge.
The bulls are still probing the bear’s commitments in the following ways:
So far, the daily support structure between 1,782 and Friday’s lows, which coincides with the 10-day EMA, has held up.
On a break of the 61.8 percent mean reversion at 1,842, bulls will be looking for a breach of the 14 June lows of 1,844.
However, a retest of the support level may be necessary initially to generate additional demand for the push higher to the next structure.
The FXS Technical Confluences Detector is a proprietary tool developed by FXStreet professionals that helps you to spot price levels where indicators such as moving averages, Fibonacci levels, and Pivot Points are congested. Knowing where these congestion spots are located is quite beneficial since it allows the trader to quickly identify regions of support and resistance.
This tool is fully customisable, allowing you to select the asset selections and time frame that best suit your trading needs./n
