On Monday, the Australian Dollar (AUD) eased slightly against the US Dollar (USD), with the AUD/USD pair trading at 0.7164, just below the 12-week high of 0.7180 reached last Friday [1]. Despite the mild pullback, the broader bullish tone for the Aussie remains intact, supported by anticipation of next week's Australian Consumer Price Index (CPI) data. Wells Fargo economists forecast headline inflation to rise 1.0% in July, which would bring the year-over-year rate down to 3.4%, while trimmed mean inflation is expected to remain at 3.6% year-over-year [1]. The possibility of a rate hike in September or the fourth quarter remains if inflation stays elevated and demand conditions are resilient, according to Wells Fargo strategists [1].
Technical analysis for AUD/USD indicates a moderate bearish correction may be likely, with the 4-hour Relative Strength Index (RSI) showing bearish divergence and the MACD line turning lower [1]. Key support is identified near 0.7130, with further downside risk toward 0.7070, while resistance is seen at 0.7200 and the year-to-date high near 0.7280 [1].
Meanwhile, gold (XAU/USD) continues its bullish run, trading near its highest levels since mid-May at $4,647.02, supported by fading expectations of an imminent Federal Reserve rate hike and lower US Treasury yields [2]. Geopolitical tensions involving Iran are also sustaining demand for safe-haven assets, although this has provided some support to the US Dollar, limiting gold's upside potential [2]. On the technical front, gold is trading well above its 100-day and 200-day simple moving averages, reinforcing a bullish near-term bias, but the daily RSI at 72.03 signals overbought conditions and suggests the rally may be vulnerable to a corrective pause [2].
Immediate resistance for gold is seen at $4,773.00, with further upside capped at $4,890.00. On the downside, support levels are noted at $4,516.92 (200-day SMA), $4,389.60 (trendline), and $4,379.73 (100-day SMA) [2]. In the shorter term, gold trades at $4,649.38, with strong momentum but increasingly stretched conditions as indicated by the hourly RSI near 68 [2].
CONCLUSION
Both the AUD/USD and gold markets are exhibiting bullish undertones, though both face technical signals of potential short-term corrections. The Australian Dollar's outlook hinges on upcoming inflation data, while gold's rally is underpinned by shifting Fed expectations and geopolitical tensions. Investors should monitor key technical levels and upcoming economic releases for further direction.