TSX futures muted after index extends retreat from all-time high
On analysis of the movements of the gold futures in different time charts, I find that the gold futures seem to move amid a fix over the possible shift in global central bank policies as the global attention turned to the release of the Bank of Japan’s July policy meeting.
Undoubtedly, the BOJ kept the short-term rate at 0.5% but signaled it would scale back purchases of exchange-traded funds and real estate investment trusts while two members of the board dissented, calling for a hike to 0.75%. The minutes reinforced the expectation that the BOJ is slowly tilting toward a more hawkish stance, even as global growth risks remain a concern.
On the other hand, Fed Chair Jerome Powell said on Tuesday there was “no risk-free path” for policy, warning of the risks of cutting too quickly or too slowly.
I anticipate that this shift in two major central banks looks evident enough to shift the focus of the other global central banks to shift their policy more focused on global growth, which is a main concern. This attitudinal change could turn the flow of money from gold to other safe havens since the overstretched price has faded its safe haven potential, and that is why gold futures are experiencing a surge in bearish pressure at the current levels.
Secondly, investors are also waiting for a string of U.S. economic reports this week, expected to provide clear signals on whether the central bank will move ahead with further rate cuts this year.
Technical Levels to Watch
In a daily chart, gold futures are constantly maintaining a sliding slope after testing a record high at $3826 on Tuesday, and now look ready for a breakdown below the immediate support at the 9 DMA at $3744 as the upside looks to be capped at $3794 while the downside is to remain open for the bulls to run downward amid expected shift in central banks’ policy.
Inversely, if the gold futures move upward and sustain above the immediate resistance at $3806, big bears will have a good opportunity to load fresh shorts above $3824 with a stop loss at $3848 for a target at $3682.
In a 1-Hr. chart, gold futures are facing stiff resistance at the immediate resistance at the 50 DMA at $3791, and look ready to face a strong reversal if they don’t find a sustainable move above this significant resistance, while a breakdown below the immediate support at the 100 DMA at $3765 will likely accelerate the quantum of selling spree till this weekly closing.
Disclaimer: Readers are advised to take any position in gold futures at their own risk, as this analysis is only based on observations.