Gold remains relatively unchanged

Gold at the time of this report, seems to be moving in an upward fashion, since last week. We note the potential for high volatility in the gold market, due to the numerous high-impact monetary policy decisions from various central banks including the FED, BOE and BOJ which are due to be released during the week. In this report, we aim to shed light on the catalysts driving gold’s price, assess its future outlook and conclude with a technical analysis.

Gold Market Analysis

US Government shutdown.

The US government for a second time in a year is facing a looming deadline upon which the US Government could potentially ‘shutdown’. The potential government shutdown has the potential to greatly affect the US economy, as it may entail many potential government employees being furloughed. Furthermore, the possibility of an agreement being reached seems to be edging further and further away, as potential proposals have been met with staunch opposition from hardline Republicans who appear to be unwilling to budge to the requests of Republican House Speaker McCarthy.

In the event of a government shutdown, which may be as soon as October 1^st we may see the greenback weakening against its counterparts, as the political situation in the US continues to be polarized, as such investors may seek for alternatives such as the precious metal which is considered to be a hedge during times of instability and as such may receive safe haven inflows. Therefore, we may see an increase in support for the precious in the event that a government shutdown is not avoided and is prolonged past the deadline of October 1^st. However, should a deal be reached, we may see the greenback gaining some support and the bullion moving to lower ground, in the event that the potential crisis is averted. In conclusion, we may see an increase in support for the precious in the days leading up to the shutdown date, where if no deal is reached, we may see further support for the precious, whilst should a deal be brokered, we may see a weakening in the precious metal.

China lifts temporary curbs on gold imports

According to a report by the Financial Times, China’s central bank lifted temporary curbs on gold imports that where imposed on some lenders in a bid to defend the renminbi. The decision by the Chinese central bank last week, may have eased pressures on the precious metal’s price, as the removal of the quota may facilitate an increase in imports of the precious metal in China, potentially weakening the price of gold, as China is a predominant importer of the precious metal, as seen by data from Gold.org in which China’s central bank has been steadily increasing their gold reserves.

In conclusion, despite the removal of import quotas on the precious metal, we personally anticipate that in order to boost the demand for the CNY, we may see a re-instatement of the curbs on the imports of gold in the future. As such, potentially increasing the price of the precious metal, at-least domestically in China, but given the sheer size of the Chinese economy it may impact  the international markets as well.

기술적 분석

XAUUSD H4 Chart

• Support: 1915 (S1), 1902 (S2), 1885 (S3)
• Resistance: 1930 (R1), 1946 (R2), 1960 (R3)

The precious metal appears to be moving in a sideways fashion with the precious having fallen back below   the 1930 (R1) resistance level, after failing to break above the 1946 (R2) resistance ceiling. We tend to maintain a neutral outlook for the commodity and supporting our is the RSI indicator below our 4-Hour chart which currently registers a figure near 50, implying a neutral market sentiment.

For our neutral outlook to continue, we would like to see the precious metal remaining confined between the 1915 (S1) support and the 1930 (R1) resistance levels, in addition to the RSI indicator below our 4-Hour chart remaining around the figure of 50.

On the other hand, for a bullish outlook, we would like to see a clear break above the 1930 (R1) resistance level, with the next possible target for the bulls being the 1946 (R2) resistance ceiling. Lastly, for a bearish outlook, we would like to see the commodity making a clear break below the 1915 (S1) support level, with the next possible target for the bears being the 1902 (S2) support base.

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