The Gold price has been looking for recovery momentum after recent sell-off

Posted by Lulama Msungwa -
Scope Markets

Gold continued to rise, hovering around 1.5% on Friday, close to $1780 per ounce. After the release of the strong US employment report, the sell-off earlier this month has pushed gold to below $1,700 per ounce. CFTC data shows that during the reporting week on August 10, COMEX gold‘s speculative net long position decreased by 55,649 lots, while speculators’ net long position was only 51,013 lots. However, the weak economic data since then weakened the Fed’s expectations and provided support for the precious metals.

Looking ahead, President Powell is already on the agenda, although given that he will chair the City Hall with teachers from all over the United States, he is unlikely to comment on any significant changes in monetary policy, but hopes to be in Jackson Hole in another week. Discussion forum. On the other hand, the minutes of the FOMC meeting will be released. Given that Fed members have recently talked about gradually cutting interest rates this year, the minutes are unlikely to be dovish.

Now that 1760 has been removed, the focus of the gold bulls will be at the 1790.1800 resistance level, which previously served as support for the previous month. In other words, while the recent decline in the US dollar and US yields is due to weak sentiment data from the University of Michigan, I expect the US dollar downside to being limited as the Fed is close to the time when they deliver. a downsizing signal, which may be the fastest in Jackson this month Seminary Hall. However, the impact on gold may mean that 1790-1800 can be held in the first test. More worrying is the level of integration between 1833 and 1790.

Technical outlook

Gold prices, 4h Scope Markets

The Gold price started the week on a positive side with an attempt to continue last week momentum. The price has been flirting at the resistance level during the US opening, and the bull traders will be eyeing a sustained move above the area for more upside moves.

Please note that the gold market is also very sensitive to the U.S. dollar, so if it starts to strengthen again, it may put pressure on this market. In addition, we need to pay close attention to the 10-year Treasury bond yield, as it has recently risen, which is detrimental to the value of gold. Ultimately, when it falls, it makes sense for gold to rebound. That being said, if people pile up on chains because of fear, it may also help gold.

Should the bulls push the price higher we could aim for 1830. Whereas a move lower could see the gold price move back down to 1700.


Research & Markets Analyst

Scope Markets

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