Gold Futures and Spot Prices:
Gold futures, specifically the most-active December contract, wrapped up the week at $1,942.70 an ounce after a final trade at $1,942.60, registering a minor gain of 20 cents on the day. Despite this late-week uptick, gold futures posted a net loss of 1.2% over the five-day period, effectively erasing the previous week’s 1.3% gain.
Spot gold, which holds particular significance for some traders, concluded the week at $1,919.15, marking a 0.03% drop of 57 cents. Over the course of the week, the spot price, reflecting real-time trades in bullion, retreated by 1.1%, partially offsetting the 1.3% gain from the prior week.
Factors Influencing Gold’s Performance:
The previous week saw gold’s gain propelled by the U.S. non-farm payrolls report for August. Despite the addition of 187,000 jobs, surpassing the forecasted 170,000, the unemployment rate edged up to 3.8% from July’s 3.5%. This development bolstered the expectation that the Federal Reserve would maintain unchanged interest rates during its September 20th meeting, briefly boosting gold prices.
However, as the new week commenced, speculation resurfaced regarding the possibility of the Fed implementing additional rate hikes before year-end to achieve its annual inflation target of 2%. While inflation, as measured by the Consumer Price Index (CPI), had declined from a four-decade high of over 9% per annum in June 2022 to as low as 3% in June this year, it rebounded to 3.2% in July. This increase raised the prospect of the Fed, which has already raised interest rates by 5% over the past 18 months, adopting a more aggressive stance on monetary policy, leading to a surge in the Dollar Index to six-month highs.
Market Outlook and Key Price Levels:
Chartist Sunil Kumar Dixit emphasized that the spot price of gold needs to make a decisive move of approximately $15 an ounce to establish a new price direction. For bearish sentiments, breaking below the crucial $1,915 support is pivotal, according to Dixit. Conversely, a clear breach of the $1,930 resistance level is the target for bullish traders.
Ed Moya, an analyst at online trading platform OANDA, remarked on gold’s performance, noting that it didn’t gain as much momentum as anticipated from the favorable job report last Friday. He also pointed to U.S. economic data hinting at a potential soft landing rather than a severe recession for the U.S. economy by year-end, which influenced gold’s decline during the week.
Moya suggested that gold may have found stability within the $1,900-$1,950 range while awaiting upcoming events such as next week’s inflation data release and the Federal Reserve meeting in the following week.
Spot Gold’s Technical Outlook:
Spot gold exhibited a rebound from the $1,915 support zone, characterized by the Daily Middle Bollinger and the 200-day SMA. However, it encountered resistance around the 50-day EMA at $1,930, leading to a decline to $1,917, as noted by SKCharting’s Dixit.
Dixit outlined a potential bullish scenario, with a settlement above the mentioned inflection point possibly resuming an upward move towards $1,930, and eventually targeting the $1,940-$1,948 range. Breaking through this zone could put spot gold on a bullish trajectory towards $1,971-$1,975.
On the downside, failure to hold this support cluster could lead to a decline in gold’s price to $1,910, followed by the 50-week EMA at $1,899. Further losses would be indicated by a drop below $1,899, potentially opening the path to deeper declines. Major support at this stage would be found at the monthly Middle Bollinger Band of $1,858.
