GOLD Price Analysis – Aug 24, 2023

Daily Price Outlook

Gold price (XAU/USD) prolonged its upward rally and gained positive traction for Thursday's fourth consecutive day. However, the upward movement was primarily fueled by growing concerns surrounding a potential global economic downturn, which strongly supported the XAU/USD. In the meantime, the emergence of some buying activity in the US Dollar may potentially limit any further gains for this precious metal.

Gold prices have maintained a positive trend for the fourth consecutive day, currently hovering just below the $1,920 mark. This level represents a near two-week high achieved in the previous trading session. However, it's important to note that the XAU/USD pair lacks strong bullish momentum, suggesting exercising caution before considering a continuation of the recent rebound from the $1,885 range.

Global Economic Concerns Boost Gold Prices

It's important to mention that China's economic situation is worsening, and recent surveys about manufacturing worldwide were not good. In the United States, the numbers are also not great. On top of that, the United States, the world's largest economy, is seeing a slowdown in business activity, almost hitting a standstill in August. This is evident in S&P Global's early report on business activity, which had its biggest drop since November 2022, falling to 50.4 in August from the previous 52. This uncertainty is boosting the price of gold, which is considered a safe investment in uncertain times.

Fed Policy and Dollar Strength Impacting Gold Prices

Moreover, the probabilities of the Federal Reserve raising interest rates further are decreasing. This caused the 10-year US government bond yield to drop after reaching a 16-year high. This drop in bond yields is good for gold. However, the market is unsure when the Fed will stop raising rates or even start cutting them. Thus, this uncertainty and some people buying US Dollars might keep traders from being too bullish on gold.

The US Dollar, measured by the DXY Index, has stopped falling after hitting a two-month high. If the Dollar gains strength, it could limit the rise of gold priced in Dollars. Investors await Fed Chair Jerome Powell's speech at the Jackson Hole Symposium. His words will provide clues about future interest rate moves, affecting the demand for the Dollar and influencing gold prices.

GOLD (XAU/USD) - Technical analysis

The gold price concluded the previous session above the level of $1913.15, thereby affirming the trajectory for an ongoing bullish momentum and the attainment of fresh positive objectives commencing at $1929.00 and extending to $1945.20. Consequently, the prospects for a bullish trend persist as a valid and active scenario, underpinned by the EMA50's supportive influence from beneath.

It's worth noting that a breach of the $1913.15 threshold could disrupt the anticipated upward movement and potentially trigger a renewed decline. The anticipated trading range for the present day ranges between the support level of $1905.00 and the resistance level of $1940.00. The outlook for today is expected to remain bullish.