Gold Remains Rather Steady

The USD seemed to steady yesterday against a number of its counterparts, while US stockmarkets even retreated a bit and gold remained relatively stable after the wide drop of its price, experienced in the past week. Comments by Fed officials, including Fed Chairman Powell, tended to keep a dovish tone and helped stabilise the precious metal which is often considered as a hedge instrument against inflation. It should be noted that US yields despite being at rather low levels seem to be edging higher and should this tendency continue it may weaken gold as it is a non-interest bearing asset. Today we expect trader’s attention to turn the US financial releases while fundamentals and monetary policy issues may take a back seat.

Gold’s prices remained relatively stable between the 1802 (R1) and the 1763 (S1) levels. We tend to maintain our bias for a sideways motion for the shiny metal’s prices, yet at the same time we note that the RSI indicator below our 4-hour chart is below the reading of 50 which may imply that gold’s price is still not out of the (bearish) woods. Should the bears actually take charge of gold’s direction, we may see it breaking the 1763 (S1) support line and aim for the 1723 (S2) support level. Should the bulls take over, we may see gold’s price breaking the 1802 (R1) resistance line and aim for the 1843 (R2) resistance level.

BoE’s interest rate decision in focus

Today pound traders are expected to keep a close eye on BoE’s interest rate decision and the bank is widely expected to keep rates unchanged at 0.10%, with GBP OIS implying a 99% probability for such a scenario to materialise. BoE policymakers seem divided after Andy Haldane’s comments the previous days on whether to taper the bank’s QE (asset purchases) program or not which is now at 875 billion-pound especially given that inflation hit its highest in nearly two years. If the bank actually tapers its QE program, the pound could get some support as that would equal a tightening of the bank’s monetary policy. Vice versa in case the bank leaves it unchanged it may disappoint traders and weaken the pound as some expectations may have built up. Overall, we maintain the view that the bank may sound confident, albeit recently the number of COVID cases is rising due to the pandemic’s Delta stem which could create some cautiousness.

GBP/USD also remained rather stable after unsuccessfully testing the 1.3990 (R1) resistance line. We tend to maintain a bias for a sideways motion for cable, yet BoE’s interest rate decision under certain conditions could increase volatility considerably. Please note that the RSI indicator below our 4-hour chart is running just above the reading of 50 and may also be implying that the market hasn’t made up its mind on the direction of the pair’s next leg. Should a selling interest be displayed by the market, we may see the pair breaking the 1.3845 (S1) support line and aim for the 1.3670 (S2) support level. Should buyers be in control of cable’s direction we may see it breaking the 1.3990 (R1) resistance line and aim for the 1.4145 (R2) level.

Other economic highlights today and the following Asian session:

Today in the European session, we note the release of France’s Business climate for June, Germany respective Ifo indicators also for June and later on BoE’s interest rate decision. In the American session, we get from the US the Durable goods orders for May, the final GDP rate for Q1 and the weekly initial jobless claims figure while from the Eurozone we get the final consumer confidence indicator for June. On the monetary front we note the speeches of Richmond Fed President Barkin, Philadelphia Fed President Harker, New York Fed President Williams, St. Louis Fed President Bullard and Dallas Fed President Kaplan. During Friday’s Asian session we note the release of New Zealand’s trade data for May, from the UK the GfK Consumer Sentiment for June and from Japan Tokyo’s inflation rates for June. Calendar follows

XAU/USD H4 Chart

Support: 1763 (S1), 1723 (S2), 1675 (S3)
Resistance: 1802 (R1), 1843 (R2), 1891 (R3)

GBP/USD H4 Chart

Support: 1.3845 (S1), 1.3670 (S2), 1.3525 (S3)
Resistance: 1.3990 (R1), 1.4145 (R2), 1.4275 (R3)