After weak US ISM data crushed the US dollar, gold prices may briefly increase.

Oct 04, 2022

VOT Research Desk

Analytical Viewpoint

On the highest day in over six months, gold prices increased 2.32%, extending gains since prices started to rise in late September. Since its September low of 1614, the price of gold has increased by more than 4.7%. At the start of the fourth quarter, a lower US Dollar and falling Treasury yields helped anti-fiat XAU/USD rise higher.

This came after surprisingly weaker US ISM manufacturing statistics.

In September, the main gauge registered at 50.9 instead of 52 as predicted, down from 52.8 in August. Economic expansion is indicated by readings above 50, and vice versa. This indicates that the manufacturing gauge just about managed a positive reading. Despite this, employment and new orders came in at 47.1 and 48.7, respectively.

The impact that incoming US economic statistics may have on the Federal Reserve’s decision to raise interest rates will be closely watched by the markets.

In various areas of the financial markets, the slightest miss or beat in economic prints is likely to cause turbulent reactions. Today was no different. Even if the markets are still expecting increases in prices in 2019, they somewhat decreased on Monday.

What might happen to gold over the next 24 hours bearing that in mind? It is anticipated that the Reserve Bank of Australia will increase interest rates on Tuesday during the Asia-Pacific trading day.

The endeavor to tighten the world’s monetary system, which normally poses a danger to gold, may continue to be supported by a commitment to maintaining the momentum.

Technical Analysis of Gold

Gold has above the 20-day Simple Moving Average (SMA). That might make it possible to prolong gains in the near future. But not far above is the long-term declining trend line from early this year. This resistance might bring the primary downside focus back. Trading should therefore be done here with some caution.