Spot gold retreats from the weekly highs of $1,833-35, but inflation and COVID concerns are still eyed

July 19, 2021 - 5 days ago
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The precious yellow metal staged another round of momentum on Friday but came to much disappointment for the bulls as the $1,833-35 level once again contained the advance.

Lower U.S. Treasury yields and concerns over the rise in coronavirus cases tied to the highly contagious Delta variant potential impact on the global economic recovery eased losses for the yellow metal.

Meanwhile, the US Dollar Index (US DXY), which normally moves inversely to gold, inched up on Monday while the benchmark 10-year Treasury note settled at 1.300% on Friday, falling for the third consecutive week.

Last week was marked by several choppy sessions of trading as investors parsed higher-than-expected inflation reading last Tuesday, comments from U.S. Federal Reserve Chair Jerome Powell and economic data on Friday.

On Friday, the U.S. consumer sentiment index from the University of Michigan came in at 80.8 for the first half of July, down from 85.5 last month and worse than forecasted.

The report showed inflation expectations rising, with consumers believing prices will increase 4.8% in the next year, the highest level since August 2008, while U.S. retail sales rose +0.6% in June, missing the forecast of -0.4%.

Viewing the technical display, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator has retreated from the overbought territory.

At the same time, the Moving Average Convergence Divergence (MACD) supports a positive signal.

In contrast, the Average Directional Movement Index (ADX) trend indicator decline suggests the presence of a trading market and the absence of a trend.

If the bears continue to defend the $1,833-35 resistance, then it is assessed a retreat to $1,800-06 now awaits.

A break below $1,786 is required to negate the upside risk.

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