Technical Analysis

GOLD Price Analysis – Sep 04, 2023

By LonghornFX Technical Analysis
Sep 4, 20233 min
Signal 2023 05 25 122622 002

Daily Price Outlook

The price of gold (XAU/USD) continued its upward trend on the first day of the week, climbing steadily above the $1,945 mark during the Asian session. It remains close to a one-month high, around $1,952-$1,953, reached on Friday, and looks set to build on its recent recovery from a low point in August when it touched $1,885. However, this upward rally was mainly driven by expectations that the Federal Reserve (Fed) will keep interest rates unchanged in its September policy meeting, providing support for XAU/USD. In contrast to this, the positive sentiment in the market may restrain bullish investors from making aggressive moves and could limit further gains in gold.

US Jobs Report Favors Gold as Fed Holds Rates Steady

It's worth noting that the most recent monthly jobs report from the United States has created a situation in which the Federal Reserve (Fed) is likely to keep interest rates unchanged at its September meeting. This development is seen as positive news for the gold market. According to the latest report, in August, the US economy added 187,000 jobs, surpassing expectations, but the previous month's numbers were revised down from 187,000 to 157,000. Moreover, the unemployment rate increased from 3.5% in July to 3.8% in August, and the yearly wage growth dropped slightly from 4.4% to 4.3%. Hence, this data suggests a less robust job market and could limit the Federal Reserve's ability to raise interest rates.

Thereby, the broad-based US dollar is currently lacking significant support, despite its recent strength, and this is playing in favor of Gold's price. It's a well-known fact that a weaker US dollar tends to stimulate demand for commodities such as Gold since they are denominated in dollars. However, it's crucial to note that the decline in the US dollar is not anticipated to be overly steep because there remains a prevailing belief in the market that the Federal Reserve may hike interest rates by another 25 basis points before the year concludes. This expectation is maintaining strong demand for US Treasury bonds and the US Dollar.

Moreover, the positive sentiment in the stock market is exerting a restraining influence on the upward trajectory of the safe-haven precious metal, Gold. This is due to investors demonstrating a clear preference for riskier assets over the traditionally secure haven that Gold represents.

China's Economic Boost and Market Sentiment Impact on Gold

Moreover, China is taking steps to boost its economy by creating a special department to help private businesses and making it simpler for people to borrow money and purchase homes. Meanwhile, because it's a bank holiday in the US and there's no major economic news, investors are feeling more comfortable taking risks in the markets. This means they might not be rushing to buy a lot of Gold at the moment.

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

GOLD(XAU/USD) - Technical Analysis

Having reached a temporary trough near the $1,935 mark, gold has exhibited a marked uptick in recent trading, making a notable push towards the $1,945.20 threshold. This upward trajectory suggests a revival of the primary bullish momentum, a sentiment further buoyed by the recently observed double bottom pattern. This paves the way for potential ascents, with initial targets set at $1,960, potentially extending to $1,977.25.

Given these dynamics, the prevailing sentiment leans towards a bullish disposition for the day's trading. This stance finds reinforcement in the EMA50's underpinning of the price trajectory. However, it's imperative to note that any inability to sustain levels above $1,945.20 could stall the bullish momentum, leading to potential intraday retracements. For the day, the anticipated trading span is delineated by a support level at $1,935 and resistance at $1,965.



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