Gold (XAUUSD) Analysis – 1st September 2023

gold analysis sept 2023

Gold price is regaining positive traction after Monday’s trading so far, as traders cheer dovish Fed expectations along with China’s stimulus optimism, limiting the upside in the US Dollar across the board. More policy action is expected from China, including relaxing restrictions on home buying. China’s embattled property developer, Country Garden, won approval from its creditors to extend payments for an onshore private bond.
Markets, however, could remain on a cautious footing, as thin volumes could exaggerate the moves in the Gold price. Traders will also await the speech by the European Central Bank (ECB)
President Christine Lagarde for some trading incentives, in an otherwise quiet start to the week.

Gold continues to trade below the short-term downtrend border of 1953 – 1947. Accordingly, selling priority remains cosntant untill 1920-1880-1850-1820 range, Consider short trades with the first target around 1922 and the second target around 1885.
If the resistance (B) 1953 – 1947 is broken out upside during the trading, the short-term trend will reverse up. In this case, consider gold purchases starting from the next trading day with a target in the upper Target Zone 2021 – 2009.

There were some positive indicators in the latest official PMI data. The manufacturing index rose slightly from 48.8 to 49.7, marking the third consecutive increase since May’s trough. However, it remains below the 50-level associated with expansion, so it simply represents a moderation of decline.On Thursday, China’s central bank conducted seven-day reverse repos worth 209 billion yuan (about 29.1 billion dollars).

The monetary policy account from the ECB’s July meeting did not offer much guidance on what the ECB would do at its September meeting. The activity data since the July meeting has been weak, while inflation has proved to be sticky. In fact, stagflation risks were mentioned twice in the account.

Gold prices are rebounding positively in today’s trading, driven by optimistic sentiment around dovish Fed expectations and China’s stimulus prospects. This has curtailed the upward momentum of the US Dollar. China is expected to unveil more policy measures, potentially relaxing restrictions on home purchases. Notably, Country Garden, a troubled property developer in China, secured approval from creditors for an extension on payments for an onshore private bond.

However, market caution persists due to thin volumes, amplifying potential movements in gold prices. Traders are keenly awaiting a speech from the European Central Bank (ECB) President, Christine Lagarde, for potential market catalysts in an otherwise subdued start to the week.

Gold is currently trading below the short-term downtrend boundary of 1953 – 1947. Consequently, the selling bias remains consistent until the 1920-1880-1850-1820 range. Short trades are advised, targeting around 1922 initially and 1885 as the second target. A potential reversal of the short-term trend would occur if the resistance (B) at 1953 – 1947 is breached upwards. In such a scenario, consider initiating gold purchases from the next trading day with a target in the upper Target Zone of 2021 – 2009.

Recent official PMI data revealed positive indicators, with a slight rise in the manufacturing index from 48.8 to 49.7. However, it remains below the expansionary level of 50, signifying a moderated decline. China’s central bank conducted seven-day reverse repos worth 209 billion yuan on Thursday.

The ECB’s July meeting’s monetary policy account offered limited guidance for the September meeting. Weak activity data post-July and persistent inflation suggest stagflation risks. Federal Reserve Chair Powell acknowledged a more favorable economic backdrop but emphasized readiness to raise interest rates further if necessary. The upcoming meetings will assess progress based on data, and decisions on tightening or holding rates steady will be made accordingly.

Key Technical Ranges to Focus On:

Support: 1900-1880-1872-1856
Resistance: 1950-1970-1985-2000-2018

Resistance Levels (R):
Support Levels (S):

Subscribe to the updates!