Gold price extends four-day winning streak as US Dollar corrects with US Treasury bond yields.
Gold price is extending the recovery from five-month lows into the fourth day in a row this Thursday. Flirting with two-week highs near $1,920. The United States Dollar (USD) is licking its wounds alongside the US Treasury bond yields. Providing a fresh lift to the Gold price. As traders position for a fresh batch of top-tier US economic data and the US Federal Reserve’s (Fed) three-day annual Economic Symposium at Jackson Hole.
The focus is on new US statistics and the Jackson Hole Symposium.
The gold price is building on this week’s bullish momentum. Aided by a sharp drop in the US Dollar and US Treasury bond yields following the S&P Global Manufacturing and Services PMI data from the United States. Which disappointed markets and bolstered expectations. That the Federal Reserve will refrain from further rate hikes this year.
Dismal US preliminary PMI data bolster dovish Federal Reserve interest rate expectations.
S&P Global said that its preliminary US Composite PMI index. Which covers the manufacturing and service sectors, fell to 50.4 in August from 52 in July. The largest decrease since November 2022 and signaling that US economic activity is approaching stagnation.
Markets have essentially priced in a rate hike, according to CME Group’s FedWatch Tool. The Fed is expected to halt CME next month. They estimate a 57.7% chance of the Fed remaining unchanged in November, up from 54% earlier. They are also re-pricing 102 basis point rate decreases for next year.
Meanwhile, a risk surge on Wall Street increased the suffering in the safe-haven US Dollar. As investors remained optimistic about Nvidia, the developer of artificial intelligence (AI) chips. The impressive performance drove Nvidia shares up 10% after the closing bell. “The leading semiconductor designer reported adjusted earnings per share (EPS) of $2.70, which was 29% higher than the Wall Street consensus.” Similarly, sales of $13.51 billion was 22% more than expected.
Next, the gold price remains a concern. A new set of US economic data, comprising Durable Goods Orders, weekly Jobless Claims. And regional business activity data, will be released to provide new insights on the strength of the US economy and the Fed’s policy path. The gold market may see some profit-taking as investors reposition themselves. Ahead of the highly anticipated Jackson Hole Symposium, which begins on Thursday. On Friday, Fed Chair Jerome Powell is scheduled to speak at the Economic Conference.
Gold Technical Outlook
Gold price continued its uptrend and recovered the crucial upward-sloping 200-Daily Moving Average (DMA), currently at $1,909, on a daily closing basis on Wednesday.
After charting an upside break from the declining trendline resistance on the daily sticks earlier this week.
The 14-day Relative Strength Index (RSI) is gradually rising. higher. Hoping to break past the 50 mark for more gains. According to the technical indicator. The tide may be changing in favor of gold purchasers.
If this occurs, gold price may try a strong break over the bearish 21 DMA at $1,921, after which a new move toward the 50 DMA resistance at $1,932 may occur.
On the downside, the 200 DMA resistance-turned-support at $1,909 provides immediate support. If the latter is not defended, the prior day’s low of $1,897 will be challenged.
Further down, the aforementioned downward trendline provides resistance.
