Technical Analysis

GOLD Price Analysis – Aug 1, 2023

By LonghornFX Technical Analysis
Aug 1, 20233 min
Signal 2023 05 25 122622 002

Daily Price Outlook

The safe-haven gold price has faced challenges lately, recording its first daily loss in three days. However, this decline can be attributed to the stronger US Dollar and rising Treasury bond yields, which have put pressure on the precious metal. Moreover, several factors have contributed to the uncertainty in the market, such as disappointing economic data from China, concerns about escalating tensions between the US and China, and the anticipation surrounding US economic indicators. These combined elements have led to challenges for gold, affecting its performance in the market.

US Dollar Strength and US-China Tensions Impact Gold Price

The US Dollar has surged to a three-week high recently due to hawkish statements from a Federal Reserve official and worries surrounding US-China relations. Adding to the geopolitical tensions, Beijing's decision to restrict drone exports in response to US tech and trade war strategies, citing "national security," has further exacerbated the situation.

As a result, the strength of the US Dollar and the fear of potential conflicts between the two economic powerhouses have impacted the price of gold. Consequently, gold has lost momentum and retreated to approximately $1,955 as investors seek refuge in the US Dollar amid the uncertain global landscape.

Economic Data and US Federal Reserve's Stance Influence Gold Price

Apart from this, the recent economic data releases from China and the United States have influenced the sentiment in the gold market. The lower-than-expected Caixin Manufacturing PMI for July in China, the lowest since January, has affected the potential for precious metals, as China is a major gold consumer.

On the other hand, if the US economy shows signs of slowing down, the Federal Reserve might change its plan to increase interest rates. This could limit the growth of the US Dollar and help support the price of gold. These factors are shaping how the gold market behaves right now.

Moreover, the ongoing trade war tensions between the US and China, specifically surrounding technology access, have added to the uncertainty in the market. China's announcement of export restrictions on certain drones and drone-related equipment to the US in September, citing "national security and interests," has heightened concerns among investors.

Moving on, market participants are closely monitoring upcoming economic indicators, including the US ISM Manufacturing PMI and the Nonfarm Payrolls (NFP) data, as they could provide further understandings into the direction of the gold price.

GOLD Price Chart – Source: Tradingview
GOLD Price Chart – Source: Tradingview

GOLD(XAU/USD) - Technical Analysis

Gold price displayed a notable upswing in the preceding session, edging closer to our anticipated target at $1,977.25. Subsequently, a mild retracement occurred, testing the EMA50, influenced by a negative stochastic momentum.

Conversely, a breach of the support at $1,945.20 would halt the envisioned upward movement, redirecting the price towards a corrective bearish trajectory, with potential objectives at $1,929.00 and $1,913.15.

In today's trading, the projected trading range is positioned between the support at $1,945.00 and the resistance at $1,977.00.



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