GOLD RETRACES AFTER ALL TIME HIGH

FUNDAMENTAL VIEW

In view of the Job report this Friday and potential rate cut by FED later this month, The USD struggled to retrace. 

The US witnessed a mix in recent economic data release, with positive ISM manufacturing prices boosting the USD on Tuesday, only to be countered by negative job openings data on Wednesday. Despite efforts to recover from previous losses, the Dollar index (DXY) struggled to rise above its August low of 100.514, the lowest since December 2023. This retracement was influenced by various factors, including fundamental and technical analysis. The market remains uncertain as the USD attempts to regain its strength amidst ongoing challenges, while waiting for other catalyst to drive the next move later this week.

In wake of the negative Job opening reading, DXY declined by -0.50% to reach 101.238, while the yellow metal surged by 0.60%.

Today, we eagerly await the release of important economic indicators such as US jobless claims, ADP data, and service PMI. Tomorrow, our focus will shift to the highly anticipated job report (NFP) and unemployment rate. These data readings are crucial catalysts that can significantly impact the market. On the other hand, gold struggles to maintain its overall bullish trend after hitting an all-time high late last month. This could be due to its inverse relationship with the USD and other various fundamental factors, such as the recent global stock sell-off on Tuesday and amongst others. Historically, gold tends to decrease in value when the stock market is under pressure.

TECHNICAL VIEW

The yellow metal after testing an all-time high of $2,531.70 on the 20th of August, we witnessed a retracement. Price has found support at the 61.8 Fib level of $2,470 and is currently trading at $2,514 as at the time of writing, surpassing the resistance line of $2,507. Additionally, trading above the 50-period exponential moving average indicates a bullish trend. This suggests a positive momentum in the market.

In view of the upcoming catalyst, if we see a positive data reading that favors the USD, technical analyst expects the price of gold to dip with potential target at $2,507. Further decline would target the 50 level of the Fib. at $2,482 there is still more room for decline. Conversely, negative reading would cause the yellow metal to surge with potential target at $2,525. Further surge to the all-time high isn’t ruled out either as per technical analyst. Whereas a mix in data is also possible, as this would likely cause lot of volatility in the market hence presenting lots of opportunities and risk to traders and investors. `

Fig. 1 Gold Spot Trading view, H4