Gold appears to have halted its rapid descent

Gold at the time of this report, seems to be moving in a sideways fashion, after moving lower last week. We note the potential for high volatility in the gold market, due to the numerous high impact financial releases stemming from the US and other economies 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.

The Japanese consumer, an unlikely gold market participant.

According to a report by the Financial Times, the retail price of gold in Japan had jumped to an all-time high last week, as the JPY has continued its descent against the dollar. According to the report, the recent gold buying spree has been attributed to the 日语 consumer, who may be looking for a hedge against inflation, as years of deflation have facilitated rising consumers prices. As such, the fact that gold is not denominated in the 日语 Yuan, could also make the precious metal more appealing for the 日语 household, who may be worried that in the long run, the dollar may continue gaining against the JPY and as such, they may see a need to reduce their exposure to a weaker JPY. Therefore, given that gold is denominated in dollars and is widely considered to be a hedge against times of inflation, we may see a continued increase in demand from 日语 consumers. Lastly, should consumer worries continue to run high about the Bank of Japan’s approach to monetary policy and the dollar continues to gain against the JPY, we may see a continued increased in demand for the precious metal from Japanese households in the long run, thus potentially supporting the price of gold.

China’s gold shopping spree continues.

The Chinese Central Bank continued its gold acquisitions, by adding 930,000 troy ounces, or approximately 29 tons to its gold reserves during the month of August. The continued acquisition of the precious metal, continues to drive speculation that China is intent on reducing its reliance on the dollar, as is apparent by its 10-Month consecutive buying streak. According to data from Gold.org, China’s total gold reserves now sit at 2,113.46 tons, edging closer and closer to overtaking Russia as the world’s 5    largest holder of the precious metal. Furthermore, given the increasing tensions between China and the US, we may see the 中文 central bank continue its gold shopping spree well into the future. However, China’s current economic woes could potentially result in a temporary pause 或者 easing of gold purchases, in order to redirect the banks focus to more imminent economic concerns that may have to be addressed, such as the local debt faced by its provinces and their respective administrations. In conclusion, despite the apparent economic woes faced by China, we may see demand for the precious metal remaining elevated for the time being and as such could lead to support for gold over the long term.

技术分析

黄金/美元4小时走势图

• Support: 1915 (S1), 1902 (S2), 1885 (S3)
• Resistance: 1928 (R1), 1940 (R2), 1955 (R3)

The precious metal appears to be moving in a sideways fashion, after having broken above our downwards moving channel, which was incepted on the 1  of September. 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, in addition to the narrowing of the Bollinger bands which imply 低 market 波动率. For our neutral outlook to continue, we would like to see the precious metal remaining confined between the 1915 (S1) support and 1928 (R1) resistance levels, respectively.

On the other hand, for a bullish outlook, we would like to see a clear break above the 1928 (R1) resistance level, with the next possible target for the bulls being the 1940 (S2) resistance ceiling. For a bearish outlook, we would like to see 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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