Gold seems, by all accounts, to be on target for another week in the greens

Gold at the time of this report, appears to be proceeding its upward direction, however shows up to have remained moderately unaltered since exchanging begun for the week. We note the potential for high instability within the gold market, due to the various high-impact financial releases stemming from the US which are due to be released during the week. This report try’s to shed light on the catalysts driving gold’s cost, survey its future outlook and conclude with a technical examination.

US Mixed Employment data

The US Employment information that was released on Friday, shows up to have facilitated market analyst’s desires of future rate climbs. The lower-than-expected average hourly profit rate and an increment within the unemployment rate, where demonstrative of a extricating labor market, in spite of the better-than-expected Non-Farm Payrolls figure. As such, market desires of future rate climbs by the Fed appear to have eased, as a looser labor market, may debilitate the Fed’s resolve to proceed on its forceful rate climbing way as encourage rate climbs may result in an overtightening situation which may lead to the US economy entering a subsidence. Besides, as a result of showcase analyst’s desires of facilitating inflationary weights down the pipeline, the valuable metal may have capitalized on longer term desires of the Nourished possibly remaining on delay or indeed cutting rates, yet a far-fetched situation at this time. Hence, a weaker greenback may permit abroad investors to buy the gold bullion at a lower cost, in this way driving to an increment in request, which may bolster the cost of the valuable metal.

China’s economic woes

The continued issues faced by China’s economy, such as it’s property sector turmoil and local government debt, appear to be worrying for market participants. As such, due to China being one of the worlds largest economies, any uncertainty regarding their economic stability, could weigh on the global economy and should China’s economic woes continue, they may inadvertently weigh on other major economies, which in turn could fuel recession worries on a global level. Therefore, the uncertainty surrounding China’s economic recovery, could be one of the reasons that have facilitated gold’s ascent due to its safe haven status during times of economic uncertainty. However, the Chinese Government appears to be attempting to stimulate economic growth by implementing measures such as reducing the amount of foreign currency required to be held by financial institutions in reserve. This may be perceived as an  attempt to boost economic activity in the region , as local administrations in Beijing and Shanghai  are also lowering the minimum mortgage interest rates for first time homebuyers in an apparent attempt to boost the ailing property market. In conclusion, the attempts made by the Chinese government, may increase confidence in China’s economic recovery, yet we believe that this may be short lived and that underlying worries, could potentially persist and as such push the precious metal to higher ground.

Technical Analysis

XAUUSD H4 Chart

• Support: 1940 (S1), 1920 (S2), 1900 (S3)
• Resistance: 1955 (R1), 1977 (R2), 2002 (R3)

The precious metal appears to be moving in an upwards fashion, despite moving in a slightly sideways fashion since the start of the week. We tend to maintain a bullish outlook for the commodity and supporting our case is the upwards moving channel formed on the 22^nd of August, in addition to the RSI indicator below our 4-Hour chart currently registering a figure above 50, implying a bullish market sentiment.

For our bullish outlook (gold report) to continue, we would like to see a clear break above the 1940 (R1) resistance level, with the next possible target for the bulls being the 1977 (R2) resistance ceiling in addition to continuing to validate our upwards moving channel formed on the 22^nd of August. On the other hand, for a bearish outlook, we would like to see a clear break below the 1940 (S1) support level if not also making a clear break below the 1920 (S2) support base, with the next possible target for the bears being the 1900 (S3) support level. Lastly for a neutral outlook, we would like to see the precious remaining confined between the 1940 (S1) support and 1955 (R1) resistance levels respectively.

Disclaimer:
This information is not considered investment advice or an investment recommendation, but instead a marketing communication. Technical Prosperity University is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.