Technical Analysis

GOLD Price Analysis – Aug 04, 2023

By LonghornFX Technical Analysis
Aug 4, 20233 min
Signal 2023 05 25 122622 002

Daily Price Outlook

Gold (XAU/USD) price has been fluctuating as investors closely watch economic indicators and global developments. Gold price failed to stop its previous bearish rally and remained well offered around well below 1,930 level. However, the upcoming US Nonfarm Payrolls report is crucial, as it could impact the Federal Reserve's decision on interest rates in September. This uncertainty has put pressure on Gold prices, as investors fear a potential rate hike, which could strengthen the US Dollar and reduce demand for Gold.

In the meantime, the market's risk-off sentiment and high US Treasury bond yields have made it difficult for Gold buyers. Moreover, the economic data and geopolitical events continue to influence Gold's movement, making it essential for investors to analyze these factors carefully.

Economic Indicators and US Dollar Performance

Gold price remained relatively unaffected despite weak economic indicators like the US Services PMI and labor cost index. This is because the strength of the labor market does not always directly impact Gold prices; it's more connected to the performance of the US Dollar. Thus, the stronger US Dollar have contributed to a dip in Gold prices.

Furthermore, the global events and geopolitical tensions have significantly impacted the Gold price. For example, when Fitch Ratings downgraded the US credit rating, investors sought safety in Treasury bonds, affecting market sentiment. Apart from this, the tensions between the US and China, worries about China's economic growth, and news of potential restrictions on US investments in China have created uncertainty, influencing Gold prices. Hence, these events highlight how external factors can play a crucial role in shaping Gold's market movements.

Impact of Recently Released US Statistics on Fed Rate Hike, US Dollar, and Gold Price

According to the recently released US statistics, there is a chance of another rate hike by the Fed in 2023, despite low probabilities. The US Dollar is being boosted by economic fears arising from the US credit rating downgrade and US-China tensions, which is affecting the Gold price. In July, the US ISM Services PMI dropped to 52.7 from 53.9, with softer Employment and New Order Index readings, while Prices Paid increased. On a positive note, US Factory Orders improved to 2.3% in June, and Initial Jobless Claims met expectations. Nonfarm Productivity for Q2 rose by 3.7%, and Unit Labor Cost eased to 1.6%.

GOLD Price Chart – Source: Tradingview
GOLD Price Chart – Source: Tradingview

GOLD(XAU/USD) - Technical Analysis

The gold price is currently teetering just below the critical mark of $1929.00, but it's not sitting still! Amid timid yet intriguing positive trading, the precious metal managed to stage a bounce back. However, all eyes are on the Stochastic indicator, which seems to have lost its positive momentum, eagerly waiting for the price to unveil its next move. Will it resume its downward journey, targeting the intriguing level of $1913.15?

The stakes are high as the downward trend awaits continuation, with all eyes on the intriguing Double Top pattern that has been completed. To maintain this exciting bearish momentum, the price must strive to remain below $1945.20.

Today's trading is sure to keep traders on their toes, with an expected trading range of $1915.00 to $1945.00. The suspense builds as we eagerly watch the thrilling price action unfold!



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