Gold is trading at $1400-40 area. Recently, the price has broken above $1440 with a daily close but failed to sustain momentum.

Recent gains on gold were supported by IMF's comments that the US dollar is overvalued, and US President Donald Trump's call for lower interest rates. The Fed is widely expected to cut rates by at least a quarter-point this month, and some believe rates will be 50 basis points lower after the September policy meeting which is expected to help gold gain ground.

According to Fed official James Bullard, an interest rate cut can be a necessary element for current economic condition but it is not confirmed by the Fed. Cutting rates could reset people's expectations for inflation and reset relative US government bond prices to a level more conducive to growth but it may take time to see who has endorsed a 25 basis point rate cut at the July 30-31 meeting. Worse outcomes in US trade negotiations or a poor response by inflation to Fed easing could create reasons to ease policy further. If it happens, gold is likely to grow.

TECHNICAL OVERVIEW:

The bullish daily candle which broke above $1440 area was engulfed completely by the Friday's daily candle which indicated downward pressure. The price may retrace towards $1400 area again but not below. As the price remains above $1400 area, the bullish bias is expected to continue for the ultimate target of the $1500 area.

TECHNICAL LEVELS:

SUPPORT: 1380, 1400

RESISTANCE: 1440, 1450, 1500

BIAS: Bullish

MOMENTUM: Volatile

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