21 August
Gold and silver market
Introduction:
The past week witnessed downward pressure on Spot Gold as positive US economic data heightened market caution, triggering a search for cues on the inflation outlook. Amidst these shifts, the looming economic challenges in China cast a shadow on Gold prices. With the People’s Bank of China (PBoC) surprising the market by reducing interest rates, the stage is set for potential fluctuations in investor sentiment and the broader trends within China’s economy. As the precious metal faces these intricate dynamics, this week holds essential events like US Home Sales, S&P Global PMI surveys, and a pivotal speech by Fed Chair Jerome Powell during the Jackson Hole Symposium.
China’s Influence on Gold:
The Gold price encountered a challenge due to China’s ongoing economic uncertainties. The PBoC’s decision to lower interest rates by 10 basis points, though falling short of market expectations, could be a key driver influencing investor sentiment. Despite a cautious approach from Chinese policymakers, the anticipation of further interest rate reductions and relaxation measures in the coming months may lend support to Gold prices that are already feeling the strain.
US Economic Data and Powell’s Speech:
Investors will closely track US economic data releases this week, with a particular focus on Home Sales and preliminary S&P Global PMI surveys for August. Additionally, the spotlight will be on Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium on Friday. Powell’s insights into the state of the US economy will likely guide strategies for new positions in Gold.
Technical Indicators:
From a technical perspective, Spot Gold appears to be in an oversold condition, as indicated by the Relative Strength Index (RSI) hovering around the 30 level on daily charts. The Moving Average Convergence Divergence (MACD) remains in negative territory on these charts. However, on the 4-hour charts, the RSI is in positive territory, accompanied by a positive crossover in the MACD. These technical indicators suggest a potential shift in momentum.
Key Levels and Strategies:
Bulls eye critical levels at 1894 and 1905, which must be breached with substantial closing prices to signal a more bullish outlook. For the current trading day, long positions could be considered with targets set at 1894 and 1905.
Conclusion:
As Spot Gold navigates through a complex interplay of economic data, China’s economic landscape, and central bank decisions, the upcoming week holds pivotal events that could reshape its trajectory. Investors remain on the lookout for signals from China, the US economic data releases, and Powell’s insights, all of which could mold strategies for engaging with this ever-evolving market.
– Nitin Kedia
