23 August
Spot Gold prices have slightly extended their gains, maintaining a positive trend for the third consecutive day. During the Asian session on Wednesday, XAU/USD is hovering around $1,900 per troy ounce. This marks a recovery after experiencing losses for four weeks in a row, despite the US Dollar (USD) strengthening.
Nonetheless, there are factors like heightened risk aversion and concerns about China’s economy that are putting pressure on the price of Gold. These elements could potentially influence the overall trajectory of Gold prices.
Investors are closely watching China’s economic challenges and financial situation. Any indications of further progress in fiscal stimulus will be welcomed. According to Reuters, during the BRICS summit in South Africa, Chinese President Xi Jinping expressed confidence in China’s economy, highlighting its resilience and unchanged long-term growth fundamentals.
In the currency market, the US Dollar Index (DXY), which measures the USD against six major currencies, showed resilience on Tuesday, ending the day on a positive note. Currently, the DXY is hovering around 103.50. Decreases in US Treasury yields and disappointing US Existing Home Sales might place some pressure on the US Dollar.
Recent data showed a 2.2% decline in US Existing Home Sales in July, falling to an annual rate of 4.07 million, below the expected 4.15 million. The Richmond Fed Manufacturing Index improved slightly in August, aligning with market expectations. The upcoming Jackson Hole annual symposium is of great significance, mainly due to Fed Chair Powell’s scheduled speech on Friday.
Looking ahead, traders are focused on the US economic calendar, featuring preliminary S&P Global Manufacturing PMI for August and New Home Sales Change for July during the North American session. These datasets could offer insights that guide decisions on trading Gold.
From a technical perspective, Gold prices have touched the 9-day exponential moving average (EMA) and are trading around it. The next resistance level is at 1907, which also coincides with the 200-day EMA. Additionally, the 38% retracement level between the recent high of 1987 and the low of 1887 is around 1924. Crossing this level would be a significant move for bullish traders.
On the downside, if the low from yesterday at 1889 is breached, bearish sentiment might take over.
For the day, there’s a trading range between 1889 and 1907. Traders can consider buying or selling based on breakouts of these levels.
– Nitin Kedia
