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June 14, 2021

XAU- Deep Dive Market Analysis (6/14/2021)

Frank Cabibi

Market of the week:

Recent sell pressure has taken this precious metal down on inflation news that came out last week. It looks like investors don't know what to think about the market right now as inflation is said that levels will remain the same and interest rates will remain unchanged.

Fundamental Analysis

Inflation:

A week dollar means a strong equities market and a higher price of gold; however, the expectation of a flattening inflation curve sounds like good news for the USD which could spell upside for the dollar as demand rises. We believe this to be short term bullish sentiment on the dollar since these are only expectations regarding future inflation, and that the economy is performing increasingly well. Since USD is mainly used as a safe-haven currency, a bustling economy is not ideal for dollar bulls, but stock bulls.

COT:

Last week's COT numbers showed a slow in purchasing the dollar asset and was actually a decrease in long positions. Long positions on gold have remained flat for the past three weeks, but this recent dip and rise in the price of gold could be from big money selling a lot of contracts.

Technical Analysis

XAUUSD 4H

A false breakout lead to an immense sell-off on the gold chart above. Gold came down and touched underneath its 200 SMA on the 4H timeframe to hit support around $1,845 before bouncing hard to the upside. Heavy resistance sits above where price made a double top around $1,900. Price may consolidate around its 200 SMA for the time being until sentiment starts swinging one way or the other.

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