Gold Price Hits New 6-Year High, Rally Seems Unstoppable

Key Highlights

  • Gold price rallied above the $1,500 and $1,520 resistance levels against the US Dollar.
  • A new 6-year high was formed above $1,530 before the price corrected lower.
  • The US CPI increased 1.8% in July 2019 (YoY), more than the 1.7% forecast.
  • The UK CPI might increase 1.9% in July 2019 (YoY), less than the last 2.0%.

Gold Price Technical Analysis

This month, gold price gained more than $100 and surged above the $1,480 and $1,500 resistance levels. The price even traded to a new 6-year high above $1,530 and it remains well supported on the downside.

Gold Price Technical Analysis

The 4-hours chart of XAU/USD indicates that the price climbed above the key $1,500 resistance and settled well above the 100 simple moving average (4-hours, red).

It opened the doors for more gains and recently the price surpassed a bullish continuation pattern with resistance near $1,506. It traded as high as $1,534 and is currently correcting lower.

On the downside, there are many supports near the $1,510 and $1,500 levels. The previous resistance near $1,510 is likely to act as a strong support along with the 50% Fib retracement level of the upward move from the $1,487 low to $1,534 high.

The main support on the downside is near the $1,488 level, below which the price could start a significant downside correction towards the $1,460 and $1,450 support levels.

On the upside, an immediate resistance is near the $1,535 level, above which the price could accelerate towards the $1,550 and $1,555 levels in the coming days.

Fundamentally, the US Consumer Price Index report for July 2019 was released by the US Bureau of Labor Statistics. The market was looking for a 0.3% rise in the CPI compared with the previous month.

The actual result was similar to the forecast, as the US CPI increased 0.4%. However, the yearly change exceeded the forecast, with an increase of 1.8% (more than the last 1.6% and better than the 1.7% forecast).

US Consumer Price Index report for July 2019

The report added:

The index for all items less food and energy rose 0.3 in July, the same increase as in June. The July rise was broad-based, with increases in the indexes for shelter, medical care, airline fares, household furnishings and operations, apparel, and personal care all contributing to the increase.

Overall, gold price remains in a strong downtrend and remains supported on dips near $1,510 and $1,500. Looking at EUR/USD, the pair is showing positive signs, while GBP/USD is still trading in a bearish zone below 1.2200.

Economic Releases to Watch Today

  • Germany’s GDP Q2 2019 (QoQ) (Preliminary) – Forecast -0.1%, versus 0.4% previous.
  • UK Consumer Price Index July 2019 (YoY) – Forecast +1.9%, versus +2.0% previous.
  • UK Core Consumer Price Index July 2019 (YoY) – Forecast +1.8%, versus +1.8% previous.
  • Euro Zone GDP Q2 2019 (Preliminary) (QoQ) – Forecast 0.2%, versus 0.2% previous.

Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

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