Gold prints new all-time high

黄金 moved higher since last week, as talks of an inevitable recession have intensified allowing gold to skyrocket to a new all-time high of $2078. Following rumours of Pacific West Bancorp potentially filing for bankruptcy, market fears of a recession were yet again heightened and at the time of this report, it appears that the shiny metal is moving in a upwards fashion. In this report, we aim to shed light on the catalysts driving the precious metal’s price, assess its future outlook and conclude with a technical analysis.

Recession worries facilitate Gold’s ascent.

Economic data highlighting the negative aspect of the US economy, have facilitated gold’s upwards movement, with the precious, remaining well above the $2000 key psychological level as these words are being written. Last Thursday, the US Initial Jobless Claims came in much higher than anticipated, with the actual figure coming in at 242k in addition with the Preliminary Non-Farm productivity on a QoQ basis worsened drastically by coming in at -2.7, greatly stressed the rapid deterioration in economic growth in the US. In addition, the continued failure by the legislative authorities in the US to resolve the debt ceiling standoff have intensified market worries that there is a very real possibility that the US Government may default on its debt, leading to catastrophic failures seen instantly as the “X-Date” may be as soon as June 1 . The persistent fears of the US defaulting on its debt, resulted in outflows from the greenback, as traders’ worries intensify, highlighting the very sensitive situation that currently exists in the US. In addition, the continued banking fears surrounding Pacific West Bancorp that may be the next bank to declare bankruptcy in the US, has allowed gold to capitalize from both events respectively given its safe haven status in times of financial instability. However, we note that the US Non-Farm Payrolls figure for April came in much higher than anticipated in addition to the unemployment rate for April reaching all-time lows reversing some of Gold’s gains in the past days, as the US employment market remains tight and possibly easing worries for the economic outlook, that may not be as dire as was initially anticipated. Overall, the financial releases from last week facilitated short-term inflows into the precious metal, as market worries of a recession were heightened at some point.

Gold traders find support following the Fed interest rate decision.

The Fed last Thursday hiked interest rates by 25 basis points, as was anticipated by market analysts. Following the news, the greenback weakened which allowed the precious metal to capitalize on a weaker dollar and continued its upwards ascent supported by the FOMC’s accompanying statement mentioning that “In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook” implying that the bank may remain on hold in the future. However, the relatively hawkish comments by Fed Chair Powell that it is “not appropriate to cut rates” seemed to undermine market predictions of possible rate cuts after the summer but had no visible effect on Gold’s ascent.

技术分析

黄金/美元4小时走势图

• Support: 2005 (S1), 1975 (S2), 1940 (S3)
• Resistance: 2045 (R1), 2075 (R2), 2110 (R3)

Gold’s price seems to continue in an upwards fashion, having failed to break below the support level at 2005 (S1). We tend to maintain a bullish outlook for the bullion, and supporting our case is the RSI indicator below our 4hr-chat breaking above the reading of 50. For our bullish outlook to continue we would like to see a clear break above the 2045 (R1) resistance barrier and a move towards the 2075 (R2) resistance line once again. Should the Bulls break above R2 then gold will most likely set new all-time highs, which could weaken the bulls resolve. On the other hand, should the bears take over, we may see a break below the support at the 2005 (S1) level with the next potential target for the bears being the 1975 (S2) support base. Please note that the support and resistance levels have a wide margin between them, yet the bullion was able to cover that distance within 24 hours.

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