Gold surrenders as risk sentiment heats up (with Trading Strategy)

Spot gold closed at $1803.36 per ounce in late trading, down $6.80 or 0.38%. Earlier in the day, the price of spot gold once hit a high of $1,13.68 per ounce, but then quickly fell $19 to a low of $1,794.45 per ounce, and rebounded slightly in late trading.

COMEX August gold futures closed down 0.4% to 1,803.40 US dollars per ounce, a record low in the last two weeks.

The surge of delta variant infections aggravated concerns about the stagnation of the global economic recovery, weighed on risk sentiment, and triggered a stock market sell-off on Monday, but since then global stock market and bond yields have rebounded, making safe-haven gold less attractive.

"The stock market breathed a sigh of relief, and U.S. Treasury bonds and crude oil prices rebounded again. These are signs of reinflation trading, which is not good for gold," said Phillip Streible, chief market strategist at Blue Line Futures. But Streible said that the inflationary environment of accelerating economic growth and rising inflation is beneficial to silver, platinum and palladium, which also have industrial uses.

The higher yield puts pressure on non-yield gold because it increases its opportunity cost.

David Meger, head of metal trading at High Ridge Futures, said, “We are back to this push-pull market situation. Some factors have a positive impact on the global gold market, while others have a negative impact.”

Meger pointed out that the Fed's view of temporary inflation may prove to be correct, especially considering the increasing number of new crown infections, which is not good for inflation hedging tools such as gold, but in this case, loose monetary policy will support gold.

Fed officials will meet next week, and the European Central Bank will meet on Thursday.

Although the dollar has fallen from its highest level since the beginning of the year, the price of gold still fell.

Outlook

Michael Hewson, chief market analyst at CMC markets UK, said, “U.S. Treasury yields seem to be slightly firmer and European stock markets are buying slightly better, which makes gold less attractive.” Exinity Group market analyst Han Tan said. In the battle for the dominance of safe-haven, gold has been losing to the US dollar, and spot gold may not be able to break through the psychological barrier of US$1,800. "As long as the U.S. dollar remains the main safe-haven currency, spot gold is expected to continue to be suppressed."

Guideline for Trading Central strategy

Trend chart reading guideline

1. First look at the time period in the upper left corner of the chart：

‧30MIN and 1H chart shows the trading suggestions for intraday

‧Daily chart shows the market trend analysis in next 2-3 days

2. The blue horizontal line on the chart marks the pivot: pivot indicates the reversal of the market. When the price is above the pivot, it indicates an upward trend, when the price is below the pivot , it indicates a downward trend. When the price breaks through the pivot, the trend is reversed.

3. The red and blue thin curves in the Candlestick chart chart are technical indicators: Red line is  MA20+Bollinger bands, Blue line is MA50. under the Candlestick chart chart are also the technical indicators:  Blue line is RSI, Red line is 9MA;

4. The green horizontal line is the resistance level for a price increase, and is also the profit target for long orders; the red horizontal line is the support level for a price decrease, and is also the profit target for short orders.

How to use TC strategy？

1.[Pivot] is the reversal line of the market trend. When the price up the pivot line which means in Bullish, you can open a long position or Buy. on the contrary, when the price under pivot line which means in bearish. You ‘d better make short positions or Sell. 

2. [our preference] is the main trading suggestion for your reference. You can exit your trading refer to this target or close positions before it.

3. [Alternative scenario] is the plan B for your reference. 

4. [Comment] is the technical analysis of market trends and technical support for trading strategies. 

5. [Supports and resistance] Supports are levels where the price tend to find support as it falls.

Resistances are levels where the price tend to find resistance as it rises. So, exit before the trend reverse.