Fundamental analysis of XAU/USD

Gold prices recently hit a near nine-week high amid a weakening dollar and speculation that the Federal Reserve may hold off on raising interest rates. The U.S. dollar index, which is currently near a one-year low, has declined, boosting gold's purchasing power for holders of other currencies.

Investor sentiment is leaning toward a 25 basis point hike in interest rates at the upcoming Fed meeting, which would keep rates in the 5.25%-5.5% corridor for 2023. Despite the low odds of a rate cut in 2023, lower interest rates traditionally favor gold as it reduces the opportunity cost of owning an underperforming asset. Compared to the current market, factors such as a weak currency and low money demand support gold by increasing demand for safety and financial security. It's not just investors who are concerned about monetary policy. Also in the news is the upcoming US jobless claims report for the week ended July 15, which is expected to rise to 242k from the previous forecast of 237k. Given that US jobless claims were unchanged in the last quarter and are expected to remain unchanged, any downturn or rise could reinforce gold's positive momentum. 

XAU/USD was further supported by the latest monetary policy decision in China and disappointing US housing and consumer data. Actions by the People's Bank of China (PBoC) to ease restrictions on foreign investment and reduce geopolitical tensions with the US are contributing to gold's gains. In addition, US bank expectations and comments on the willingness of BRICS countries to accept yields have also caused increased pressure on gold/dollar. Conversely, increased risk-taking by major central banks and market uncertainty in the Asia-Pacific region could hit gold investors.

However, in this environment of uncertainty in the global economy, the focus is on the next US unemployment data and the Fed's decision, which could determine the future direction of gold prices. In general, the rise in gold prices will continue for some time to come in the context of global economic factors such as a weak US dollar, dovish Fed expectations and the state of the Chinese economy. 

Technical analysis and scenarios:

The gold price (XAU/USD) is currently exhibiting a bullish pattern as evidenced by the Alligator indicator, which has a wide open jaw with the jaw (blue line) below the teeth (green line) and lips (red line), indicating an ongoing uptrend. The Awesome Oscillator (AO) and Accelerator Oscillator (AC) are in the green zone, confirming bullish sentiment.

Main scenario (BUY)

Recommended entry level: 1985.00.

Take Profit: 2000.00.

Stop loss: 1980.00.

Alternative scenario (SELL)

Recommended entry level: 1969.50.

Take Profit: 1938.50.

Stop loss: 1980.00.