Fundamental analysis of XAU/USD

The XAU/USD pair is recovering as the U.S. dollar nears a one-year low and traders expect a change in monetary policy. US Federal Reserve Currency. Slowing global economic growth and potential market uncertainty have increased the attractiveness of gold as a risk hedge. The Fed's forecast of a weaker tightening cycle, which would lead to lower real yields, further reinforced the bullish outlook for gold. The Fed's tightening cycle is coming to an end, although the upcoming Fed meeting may temporarily reduce gold's appeal. This conclusion is based on current speculation of a 25 basis point rate hike at the July Fed meeting with the possibility of a rate cut by 2024.  Such an increase affects gold because it reduces the opportunity cost of holding gold as it becomes unprofitable. 

 This has led many investors to view gold as a safe haven in case of a global recession or adverse market events. Treasury Secretary Janet Yellen and Goldman Sachs chief economist Jan Hatzius have also expressed optimism about the U.S. economy. At the same time, the ECB and the Bank of England will have to continue the cycle of rate hikes to contain inflation, which reached 5.5% and 8.7% respectively in June. In contrast, the Reserve Bank of Australia left its key rate unchanged this month. Investor confidence continues to be undermined by weak economic data from China. 

 In addition to the above factors, the rebound in US-China relations, the prospects of further stimulus for China's economy and the difficulties in implementing a restrictive monetary policy have strengthened gold's position. Market participants are watching the upcoming June data on retail sales and industrial production in the U.S., which may have an impact on the dynamics of gold prices. Currently, traders are targeting the 2000 USD mark.

Technical analysis and scenarios:

From a technical perspective, the gold price (XAU/USD) is currently trading at 1961.90 and is in an uptrend as evidenced by the Alligator indicator. The Alligator's jaw (blue line) is below its lips and teeth (green and red lines), indicating that the market is bullish. The Awesome Oscillator (AO) and Accelerator Oscillator (AC) indicators are in the green zone, which is a confirming buy signal.

Main scenario (BUY)

Recommended entry level: 1969.50.

Take Profit: 1980.00.

Stop Loss: 1963.00.

Alternative scenario (SELL)

Recommended entry level: 1938.50.

Take Profit: 1915.00.

Stop loss: 1950.00.