- Gold Price fades bullish bias as full markets return after long weekend in the United States.
- Mixed sentiment about China, Federal Reserve prod XAU/USD buyers.
- China Caixin Services PMI, US Factory Orders will decorate calendar.
- Updates about Sino-American ties, stimulus from Beijing could act as extra catalysts.
Gold Price remains depressed around $1,938, extending Friday’s pullback from the monthly high after a downbeat start to the week. The yellow metal marked a dull performance the previous day amid the United States Labor Day Holiday. However, the uncertainty about the Federal Reserve’s (Fed) next move and a lack of confidence in China’s efforts to defend the world’s second-largest economy seems to weigh on the XAU/USD of late.
Moving on, the full markets return to the table on Tuesday and may offer an active day amid a slew of data/events scheduled for publishing. Among them, China Caixin Services PMI and the US Factory Orders will be eyed for clear directions.
Gold Price retreats amid indecision
Gold Price fails to defend the two-week uptrend amid mixed clues about China and the Federal Reserve (Fed).
Starting with the upbeat United States Nonfarm Payrolls (NFP), the August numbers initially renewed hawkish bias about the Fed, even if the Unemployment Rate and Average Hourly Earnings kept the policy pivot concerns on the table afterward. Following that, the global rating agency Moody’s revised up the US Gross Domestic Product (GDP) predictions for 2023 to 1.9% versus 1.1% expected in May.
It’s worth noting that the market’s bets on the Federal Reserve’s (Fed) status quo in September contrasts with a recent improvement in the odds favoring a rate hike during late 2023 seems to weigh on the Gold Price even as the US Dollar remains depressed. That said, Federal Reserve Bank of Cleveland President Loretta J. Mester defended the US central bank’s hawkish move and ruled out the rate cut bias in her speech on Friday, which in turn prod the Gold buyers.
On the other hand, China’s readiness for opening up the services industry, as well as developments of the manufacturing activities, joins a slew of measures to cut mortgage rates and infuse more liquidity to underpin the XAU/USD upside.
Furthermore, optimism about China’s struggling reality firm Country Garden and the upbeat growth numbers from India, one of the world’s biggest Gold customers, also keep the Gold buyers hopeful.
However, the market’s lack of confidence in the Chinese measures to defend the economy, as well as the Sino-American tension, recently over Taiwan and the US businesses’ discomfort in Beijing, prod the optimism, which in turn challenges the Gold buyers.
Amid these plays, the US Dollar Index (DXY) began the week on a negative note while posting the first daily loss in three.
Federal Reserve, China clues eyed for XAU/USD directions
Looking ahead, the return of the United States traders after a long weekend and the market’s reaction to China’s Caixin Services PMI for August, as well as the US Factory Orders for the said month, will be important to watch for clear directions. Above all, updates about the Federal Reserve’s (Fed) next moves and clues about China’s economic recovery, as well as the stimulus measures, will be important for Gold traders to watch for fresh impulse.
Gold Price Technical Analysis
Gold Price remains pressured after reversing from a six-week-old descending resistance line, around $1,950 by the press time.
Adding credence to the downside bias are the bearish signals on the Moving Average Convergence and Divergence (MACD) indicator, as well as the Relative Strength Index (RSI) line, placed at 14, retreat to the 50.0 level from an overbought territory.
It’s worth noting, however, that a fortnight-old rising support line and the 200-Simple Moving Average (SMA), around $1,933 and $1,930 in that order, restrict the short-term downside of the Gold Price.
Following that, nine-week-long horizontal support of around $1,903 and the $1,900 round figure may prod the XAU/USD bears before directing the sellers toward the previous monthly low of around $1,885.
Meanwhile, the 61.8% Fibonacci retracement of the Gold Price declines from July to August, around $1,948, restricts immediate upside ahead of the stated resistance from late July 19, close to $1,951 at the latest.
Following that, July’s peak of around $1,985 will act as the final defense of the Gold bears.
Gold Price: Four-hour chart
Trend: Pullback expected