GOLD Price Analysis – Sep 07, 2023

Daily Price Outlook

Gold price (XAU/USD) managed to stop its three-day losing streak and gained some fresh traction on Thursday. However, this uptick can be attributed to a combination of factors, including a generally pessimistic sentiment in the stock markets, concerns about China's economic situation, and ongoing trade tensions. As of now, the XAU/USD pair is hovering just below the $1,920 mark, posting a modest gain of nearly 0.15% for the day.

It's worth noting that the equity markets are showing signs of weakness, prompting investors to seek refuge in safe-haven assets such as gold. Moreover, worries about the worsening economic situation in China and the ongoing trade disputes between the United States and China are lending support to the XAU/USD pair. On the other hand, there are expectations of more interest rate hikes by the Federal Reserve, which could boost the value of the US dollar and potentially limit the upside for gold.

Gold Gains Support Amidst China Concerns and Trade Tensions

As we mentioned above, the ongoing concerns about China's worsening economic conditions and long-lasting US-China trade tensions are having a noticeable impact on investor sentiment. This is evident in the overall weaker performance of equity markets. These factors, in turn, are bolstering the safe-haven appeal of precious metals like gold. Furthermore, the subdued performance of the US Dollar is offering additional support to the price of gold. However, it's important to note that despite these factors, a significant upward move in gold prices remains relatively inaccessible at this point.

US Economic Strength and Fed Rate Hike Expectations Impacting XAU/USD

On the flip side, the outlook for the US economy appears to be influencing the trajectory of the US dollar and, consequently, the performance of the XAU/USD pair. The Institute for Supply Management (ISM) reported a surprising acceleration in business activity within the US services sector for August, with the non-manufacturing PMI rising from 52.7 in July to 54.5 last month, marking its highest level since February.

Moreover, the report revealed an increase in new orders, indicating strength in the US economy, and a higher Prices Paid sub-component, hinting at lingering inflation pressures. These developments have raised the probability of another 25 basis points Fed rate hike by year-end, causing the yield on the 10-year US government bond to approach its August 23 peak and pushing the USD to its highest level since March 9. These factors are expected to limit any significant correction in the US dollar and cap potential gains for XAU/USD.

GOLD(XAU/USD) - Technical Analysis

Gold prices have distinctly retraced, approaching the anticipated primary target level at $1,913.15. Current indicators suggest an ongoing decline, potentially reaching the vicinity of $1,890.00, especially after surpassing the preceding benchmark.

Given this backdrop, we project a bearish trajectory in the near future, further underscored by the downward pressure exerted by the EMA50. It's imperative to highlight, however, that any breach above the $1,929.00 mark could halt the anticipated downtrend and prompt an intraday price recovery attempt.

Today's projected trading range lies between a support at $1,900.00 and a resistance at $1,930.00.