Gold may experience short-term consolidation or a modest increase, with resistance levels at 1976 and 2015, and support levels at 1945 and 1913. Decisions on interest rates by the Fed and the European Central Bank could potentially support gold prices. Looking at CFTC positioning data and technical analysis, the medium to long-term trend for gold remains uncertain, while short-term movements are expected to be volatile.

In the previous week (July 17th - July 23rd), precious metals had mixed performance, with gold edging up by 0.3% and silver declining by 0.9%. The fluctuation in gold prices was influenced by the US June retail sales data, which fell significantly below market expectations. Following the fluctuations in the US dollar index, gold briefly rose by $30 during intraday trading but later experienced downward volatility, ultimately closing at $1960.

Source: MacroMicro - Percentage Change of Major Precious Metal futures in the 3rd Week of July 2023

On July 18th, the US Department of Commerce announced that US June retail sales grew by 0.2%, well below the market's expected 0.5% growth and the previous value of 0.3%. Following the data release, the US dollar index initially declined and then rebounded, causing gold to fluctuate. Gold briefly rose by $30 but ultimately closed at $1978.92, with an increase of over 1.22%.

Mitrade Analyst 

Previously released economic data in the US showed positive results, with a stable labor market and lower-than-expected inflation easing pressure on household consumption. The temporary rise in gold was followed by a decline.

The Fed meeting this week is widely believed to result in a 25 BP interest rate hike. Prior to this announcement, gold is expected to experience minor fluctuations. Based on the previous two rate hikes, gold may initially rise before falling. We also need to pay attention to the impact of the European Central Bank's interest rate decision on the US dollar. If there is an interest rate hike, it could exert downward pressure on the US dollar, which could be beneficial for gold in the short term.

Speculative long positions in gold have seen a significant increase, providing upward momentum for short-term gains. According to the latest CFTC position data from July 12th to July 18th, speculative long positions in gold increased by 27,594 contracts compared to the previous period. During the same period, speculative long positions in gold futures also saw a substantial increase of 23,194 contracts, while short positions decreased by 4,400 contracts. These developments indicate that short-term market investors are bullish on gold.

Mitrade Analyst

In summary, with speculative market participants significantly increasing long positions and some short positions gradually closing out, it suggests that aggressive bulls are optimistic about the future of gold. As a result, gold is expected to experience volatile gains this week, potentially supported by positive news.

From a technical indicator perspective, the 60-day MA is parallel to the time axis, indicating no reversal signal at the moment. However, the 14-day RSI value of 55 is below 60 and showing a downward trend. At the same time, according to the MACD daily line indicator, the short-term line has crossed above the long-term line in a golden cross formation, but the opening is gradually narrowing. The short-term line is trending downward and approaching parallel to the long-term line, with the histogram gradually decreasing above the zero line. The DIFF, DEA, and MACD are all positive, suggesting a consolidation or oscillation for gold.

Resistance levels: 1976, 2015

Support levels: 1945, 1913

Source: Investing.com- July 24 Gold Daily Chart

Mitrade Analyst

Based on the analysis of various indicators, the medium to long-term downward trend of gold remains unclear. It is necessary to await reversal signals. Gold may experience initial consolidation and later show a slight upward oscillation in response to market news.

In addition, investors should pay attention this week to potential guidance for the future direction of gold, such as the Fed Interest Rate Decision and Press Conference, US Quarterly GDP Preliminary Estimate, European Central Bank Interest Rate Decision and Press Conference, and the Initial Annualized Core Inflation Rate for the Eurozone in July.