Gold Price Futures (GC) Technical Analysis – Hawkish Fed, India’s Import Tax Dampens Demand
Gold futures fell to their lowest level since late January on its way to a third consecutive weekly loss as a firm U.S. Dollar and forthcoming rate hikes tainted appetite for the non-yielding investment, while India’s import tax hike on bullion also weighed on demand.
Hawkish monetary policy is primarily responsible for gold’s dismal performance during the second quarter. The hawkish Fed is driving interest rates higher, and consequently the U.S. Dollar. The strong greenback is reducing foreign demand for dollar-denominated gold.
Adding to the bearish outlook for gold was the news that India, the world’s second biggest bullion consumer, is planning on raising its basic import duty on gold to 12.5% from 7.5% in an attempt to lower its trade deficit.
Trader reaction to $1801.50 is likely to determine the direction of August Comex gold futures early Monday. Volume is expected to be extremely light because of a U.S. bank holiday.
A sustained move under $1801.50 will indicate the presence of sellers. Taking out Friday’s low at $1783.40 will indicate the selling pressure is getting stronger. This could trigger a further decline into the January 7, 2022 main bottom at $1764.10.
A sustained move under $1801.50 will signal the presence of buyers. A move through $1813.60 will indicate the short-covering rally is getting stronger. If this is able to generate enough upside momentum then look for a surge into the short-term Fibonacci level at $1826.60.
Since the main trend is down, sellers are likely to return on a test of $1826.60.
August Comex gold is getting close to a value area so don’t be surprised by the return of aggressive counter-trend buyers.