Forex: The gold market rushes!

      In early Asian trading on Monday (July 17), spot gold maintained a slight downward trend, with gold prices now trading around $1,952/ounce. Gold traders are eyeing the upcoming Chinese GDP and other blockbuster economic data, which are expected to provide important support for the short-term trend of gold prices.

　　FXStreet analyst Anil Panchal wrote in a new article on Monday that gold prices rose sharply last week after U.S. inflation clues showed concerns about the end of the Federal Reserve's rate hike cycle and hit the dollar hard. However, optimistic U.S. data on Friday and recent mixed headlines about U.S.-China relations, coupled with anxiety ahead of China's second-quarter 2023 gross domestic product (GDP) data, hit gold bulls.

　　Spot gold closed at $1,954.55 an ounce on Friday, down $5.70, or 0.29 per cent, but last week it jumped $30.26, or 1.57 per cent.

　　Data released on Friday showed that the preliminary value of the University of Michigan's consumer confidence index rose to 72.6 in July from 64.4 in June, compared with market expectations of 65.5. Further details showed that consumer inflation expectations rose slightly to 3.4% and 3.1% in one and five years, respectively, according to the University of Michigan survey, compared with 3.3% and 3% previously.

　　Looking ahead to gold trading this week, Panchal said it was worth noting that China's second-quarter GDP, industrial production and retail sales data for June would be released. In addition, US retail sales data for June, headlines around Sino-US relations and global economic growth will be crucial to the near-term trend of gold prices.

　　China's GDP is coming

　　On Monday, China will release a series of top economic indicators, of which the second-quarter GDP growth data will receive the most attention.

　　A range of economic indicators for June - investment, retail sales, industrial production and unemployment - and a second-quarter GDP report will be released at 10:00 Hong Kong time on Monday.

　　China's economic growth has slowed markedly, according to a Reuters poll of economists. The market generally believes that China's economy is expected to grow by 0.5% in the first quarter compared with the previous quarter, much lower than the 2.2% growth rate in the first quarter.

　　Quarter 1 GDP growth is expected to reach an even more impressive 7.3% year-on-year compared to the same period last year, but this is mainly due to the base effect of low-level growth in the same period last year.

　　The People's Bank of China will set key one- and five-year lending rates later this week, and a lower-than-expected second-quarter GDP figure on Monday could tilt market expectations towards further easing.

　　FXStreet analyst Eren Sengezer said market participants will be closely watching China's June retail sales and second-quarter GDP growth figures in early Asian trading on Monday. China's economy has lost steam after a strong first quarter. The People's Bank of China has taken a number of measures, including lowering policy interest rates, to help the economy get on its feet. China's second-quarter GDP is expected to grow 0.5% quarter-on-quarter, down from 2.2% in Quarter 1.

　　Mr. Sengezer said stronger-than-expected GDP data from China, the world's biggest consumer, could help gold as investors remained optimistic about the outlook for demand.

　　Gold technical outlook analysis

　　Anil Panchal, analyst at FXStreet, said gold continued Friday's retreat from seven weeks of downside resistance, currently around $1,965, and the 14-day Relative Strength Index (RSI) was also lower. Gold prices have now slipped below the 100-day simple moving average (close to $1,956 an ounce).

　　However, cracking the 50-day simple moving average near $1,950 an ounce appears to be a tricky issue for gold bears.

　　Panchal pointed out that even if gold bears manage to break through the $1,950/oz, four months of horizontal support (around $1,935-33/oz), followed by 12 days of rising support (currently near $1,925/oz), could pose a challenge to sellers before they gain control.

　　On the upside, Panchal said that if the daily closing price breaks through the 100-day simple moving average near $1,956 an ounce, this could push gold prices up towards the resistance line near $1,965 an ounce, which would extend the price towards the previous month's high near $1,985 an ounce.

　　After that, the $2,000/oz psychological barrier will become the last line of defense for gold sellers.

　　"Overall, a correction is likely, but the bearish trend is far from established," Panchal wrote.

　　In terms of short-term trends, Panchal expects gold prices to retract.

　　At 07:44 Hong Kong time, spot gold was quoted at $1952.15 per ounce.