Current trend

The XAU/USD pair shows a weak growth, developing a moderate "bullish" trend in the short/ultra-short term. The instrument is testing the level of 1920.00, holding near the local highs of June 26 before the publication of the June minutes of the US Federal Reserve meeting.

The rally in the gold market at the beginning of the year has put a stop to the rapid movement in recent months amid the rhetoric of the heads of the world's leading central banks about their readiness to continue the "hawkish" monetary policy to fight inflation. Investors are appreciative of the prospects for a further increase in borrowing costs, as inflation turned out to be more stable than expected, and against this background, demand for the precious metal is actively declining. The Chair of the US Federal Reserve, Jerome Powell, admitted that the regulator could raise the key rate twice before the end of the year, and at the moment, almost 90.0% of analysts are confident that during the July meeting, the value will be adjusted by 25 basis points to a potential maximum of 5.50%.

Additional support for the instrument today comes from the decision of the Reserve Bank of Australia (RBA) to leave the interest rate unchanged at 4.10%, which turned out to be lower than the projected value at 4.35%.

On Friday, July 7, the focus of investors will be the June report on the US labor market: forecasts suggest an increase in the Nonfarm Payrolls by 200.0 thousand after an increase of 339.0 thousand in May. At the same time, the Unemployment Rate is expected to remain at the previous level of 3.7%, while the Average Hourly Earnings may remain at 0.3%.

Support and resistance

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is narrowing from below, reflecting the emergence of the uptrend in the short term. MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic is showing similar dynamics; however, the indicator line is rapidly approaching its highs, indicating the risks of overbought instrument in the ultra-short term.

Resistance levels: 1930.00, 1940.00, 1952.53, 1960.00.

Support levels: 1915.00, 1900.00, 1886.46, 1869.49.

Trading tips

Long positions can be opened after a breakout of 1930.00 with the target of 1952.53. Stop-loss — 1920.00. Implementation time: 1-2 days.

The return of "bearish" trend with the breakdown of 1915.00 may become a signal for new sales with the target at 1886.46. Stop-loss — 1930.00.