GOLD Price Analysis – Aug 29, 2023

Daily Price Outlook

The Gold price (XAU/USD) continued its positive momentum for the second day in a row on Tuesday. It reached around $1,925 to $1,926 during the Asian session, marking a two-week high after hitting a similar peak the day before. However, the decrease in US Treasury bond yields is pulling the US Dollar (USD) down from its nearly three-month high. Hence, this is encouraging some investors to move towards Gold. Moreover, there's optimism about China providing more economic support through fiscal and monetary policies, which is also adding to the positive outlook for Gold buyers.

US Dollar Pauses Amid Shifting Yield Dynamics and Rate Hike Speculations

The broad-based US dollar is taking a break from its recent strong position as the yield on the 10-year US government bond, which reflects borrowing costs, pulls back from its highest point since 2007. However, some people are expecting more interest rate hikes by the Federal Reserve (Fed), which could stop the US bond yields and the dollar from falling too much. These expectations got stronger after Fed Chair Jerome Powell recently talked about possibly raising rates to manage inflation. Since the US economy is strong, the Fed might keep lifting rates. This could make investors less eager to heavily invest in gold.

China's Supportive Measures Impacting the Gold Market

Moreover, the Gold market is being influenced by positive expectations of more backing from China. They're considering measures like cutting reserve requirements sooner, which could boost the economy by adding more money. This is crucial for the world's top copper importer. Also, Chinese officials are discussing giving extra financial support to their slower-recovering economy after COVID-19. All these factors together are keeping Gold buyers hopeful and shaping the way the precious metal market is moving.

Key Data Watch: US Reports and China's Impact on Gold

Looking forward, investors will keep an eye on significant US data this week, particularly the jobs report on Friday. This information could strongly influence Gold's movement. Meanwhile, worries about China's economy may continue to boost the safe-haven appeal of Gold and prevent major price drops. Investors are also paying attention to the US Consumer Confidence Index and JOLTS Job Openings data for potential short-term opportunities.

GOLD (XAU/USD) - Technical analysis

Gold's valuation demonstrates a pronounced upward momentum, inching closer to our initial projected target of $1,929. Upon closer examination of the trendlines, we observe the formation of a 'double bottom' pattern, which typically serves as a robust bullish signal. This lends significant weight to the likelihood of the price not just reaching, but potentially eclipsing the aforementioned target, setting its sights directly on the subsequent goal of $1,945.20.

Given the current market dynamics and the supportive role of the 50-day Exponential Moving Average (EMA50) - which consistently underpins the price - we maintain an optimistic forecast for gold in the near term. However, it's worth noting that any dip below the $1,913.15 threshold could derail this bullish trajectory, pivoting the market sentiment towards a potential decline. For the day, we anticipate the price to fluctuate between a support level of $1,913 and a resistance cap at $1,945.