Gold Analysis August 16
Fundamental Analysis
The US economic data was stronger than expected and the market is anticipating that these data could affect the extent of the Federal Reserve's interest rate cut. The US dollar and US bond yields rose, making it difficult for gold prices to rise.
The latest data released by the US showed that the core consumer price index (CPI) in July, which is a price index excluding food and energy costs, fell to its lowest level since early 2021 compared to the same period last year. This shows that inflationary pressures have eased, supporting the Federal Reserve to cut interest rates next month.
In particular, a report from the US Department of Labor showed that the number of new Americans filing for unemployment benefits last week fell to a one-month low.
As a non-interest-bearing asset, gold prices tend to rise when interest rates fall. As inflation slows, expectations of a Federal Reserve rate cut will increase, further boosting the appeal of gold. Additionally, gold purchases by central banks around the world have also become a reliable support for gold prices.
Apart from monetary policy, geopolitical uncertainty has also been a major factor driving demand for gold. Tensions in the Middle East and the conflict between Russia and Ukraine have increased the appeal of gold as a safe-haven asset.
Technical Analysis
From a technical perspective, the overnight failure near the $2,470 resistance level makes it prudent to wait for some follow-through buying before positioning for any further gains. With the daily chart oscillations holding in positive territory, Gold could then aim to break above the all-time highs around the $2,483-$2,484 zone hit in July and conquer the psychological $2,500 mark. A sustained strength above the latter would confirm a breakout above a month-old trading range and could be viewed as a fresh trigger for bullish traders, setting the stage for a further near-term upside move.
On the downside, the $2,447-2,445 horizontal zone now looks to protect the immediate downside ahead of the $2,430-2,429 zone and the weekly low, around $2,424. Some follow-through selling could leave Gold vulnerable to further weakness below $2,400.
Resistance: 2475 - 2488 - 2500 -2509
Support: 2438 - 2333 - 2426 - 2421
Price ranges to note:
SELL zone 2473 - 2475 stoploss 2479
SELL zone 2498 - 2500 stoploss 2504
BUY zone 2438 - 2436 stoploss 2432
BUY zone 2426 - 2324 stoploss 2420
The US economic data was stronger than expected and the market is anticipating that these data could affect the extent of the Federal Reserve's interest rate cut. The US dollar and US bond yields rose, making it difficult for gold prices to rise.
The latest data released by the US showed that the core consumer price index (CPI) in July, which is a price index excluding food and energy costs, fell to its lowest level since early 2021 compared to the same period last year. This shows that inflationary pressures have eased, supporting the Federal Reserve to cut interest rates next month.
In particular, a report from the US Department of Labor showed that the number of new Americans filing for unemployment benefits last week fell to a one-month low.
As a non-interest-bearing asset, gold prices tend to rise when interest rates fall. As inflation slows, expectations of a Federal Reserve rate cut will increase, further boosting the appeal of gold. Additionally, gold purchases by central banks around the world have also become a reliable support for gold prices.
Apart from monetary policy, geopolitical uncertainty has also been a major factor driving demand for gold. Tensions in the Middle East and the conflict between Russia and Ukraine have increased the appeal of gold as a safe-haven asset.
Technical Analysis
From a technical perspective, the overnight failure near the $2,470 resistance level makes it prudent to wait for some follow-through buying before positioning for any further gains. With the daily chart oscillations holding in positive territory, Gold could then aim to break above the all-time highs around the $2,483-$2,484 zone hit in July and conquer the psychological $2,500 mark. A sustained strength above the latter would confirm a breakout above a month-old trading range and could be viewed as a fresh trigger for bullish traders, setting the stage for a further near-term upside move.
On the downside, the $2,447-2,445 horizontal zone now looks to protect the immediate downside ahead of the $2,430-2,429 zone and the weekly low, around $2,424. Some follow-through selling could leave Gold vulnerable to further weakness below $2,400.
Resistance: 2475 - 2488 - 2500 -2509
Support: 2438 - 2333 - 2426 - 2421
Price ranges to note:
SELL zone 2473 - 2475 stoploss 2479
SELL zone 2498 - 2500 stoploss 2504
BUY zone 2438 - 2436 stoploss 2432
BUY zone 2426 - 2324 stoploss 2420
Nota
Gold retreats after setting a new record high of $2,500
Gold stages a technical correction and trades below $2,490 after setting a new record high of $2,500 earlier in the day, boosted by falling US Treasury bond yields. Profit-taking could ramp up the volatility heading into the weekend.
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