Gold Analysis: XAU/USD recovery stalled at $ 1175

XAU/USD pair – Daily Chart

Gold prices in terms of US dollar (XAU/USD) rebounded on Friday from fresh four month lows reached at 1156.01 on Thursday and ended the week on a firmer note at 1168.16. The recovery in XAU/USD was capped at 5-DMA and trend line support-turned resistance confluence at 1071 levels. The pair rebounded on Friday as traders booked profits on their gold longs after the recent weakness while US markets remained closed on Independence day holiday, providing no fresh triggers for the yellow metal.

XAU/USD kicked-off the week on a stronger note, piercing through the 10-DMA resistance located at 1172.62 and printed daily highs at 1174.36. The pair jolted higher largely driven by Greek referendum results which showed a landslide NO victory for Tsipras’ government implying, rejection of austerity measures offered by its international creditors. While the yellow metal gained on increased safe-haven bids as market evaluate the aftermath of this referendum results. Although the recovery in gold prices was stalled just under 1175 levels and the pair rebounded lower to 1167.91 lows as traders preferred the reserve currency ahead of the emergency Euro group meeting to discuss the Greek plebiscite scheduled later today.

Technically, the daily RSI at 39.25 has turned flattish, keeping range in an oversold zone and suggests a weak recovery. To the downside, the pair is likely to test 1161.29 (June 5 Low) level, below which floors would open for a test of 1159.50 (March 19 Low). While to the upside, we may see gold prices climbed back higher towards 1175 levels in case of a break below 1165.41 (July 3 Low). Overall, XAU/USD is likely to keep the range between 1175-1160 levels against a back drop of impending Greek talks.

XAU/EUR pair – Daily Chart

Gold prices in terms of Euro (XAU/EUR) closed the week higher on Friday at 1052.09 levels, failing to breach the descending triangle resistance located at 1056.45 for yet another time. The pair consolidated losses from Thursday after the shared currency was broadly supported following disappointing NFP print which dragged the greenback lower across the board. XAU/EUR bounced-off a dip to 1050.34 lows, finding good support at 20-DMA located at 1051.19 and closed above the last. The pair traded cautious ahead of Sunday’s Greek referendum which was expected to provide fresh cues.

Currently, XAU/EUR did give a descending triangle bullish breakout for the second time within the past 7 trading sessions, although failed to sustain at 1067.09 - higher levels and fell back to familiar range around 1056-1058 levels. The pair tested the triangle resistance-turned support located at 1055.65 levels, having bounced-off lows at 1056.49. However, the pair remains supported on broad based EUR sell-off amid a NO vote clear victory in the Greek referendum which spooked markets over possible outcomes such as Grexit and ECB bankruptcy.

The daily RSI just above the midlines around 50.86 aims higher indicating upside bias intact. Hence, the pair is likely to swing back higher and retest 50-DMA located at 1064 levels. A break above the last, the pair may retest daily highs at 1067.09. However, the recovery is expected to be weak and may remain capped below 1070 levels. To the downside, the pair could once again test the triangle resistance-turned support, below which the pair could drop to 10-DMA support located at 1052.92. Overall, a generalized intraday upside bias is likely to persist on the back of a broadly weaker euro ahead of key Euro group meeting scheduled later today.