Gold traders await US GDP

黄金 moved slightly lower since last week, as a mixed market sentiment has chipped away at the precious’ prior gains and at the time of this report trades around the $1985 level, remaining near last week’s closing range. Following signs of increased economic activity yet heightened fears of a recession, it appears that the shiny metal is moving in a sideways motion as the markets await further information. 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.

Gold trades slightly lower following heightened recession fears.

The mixed economic data stemming from the US has facilitated gold’s descent, with the precious, gradually losing momentum. Last Thursday, the US Philly Fed Manufacturing Index, came in much lower than expected with the figure standing at -31.3, indicative of a continued deterioration of US manufacturing conditions further weakened the greenback, as the continued decline in manufacturing production further fueled fears of a recession.Following the Fed’s Beige book release last Tuesday, the Philly Fed Manufacturing Index supported the Fed’s statements that overall economic activity has remained relatively unchanged in recent weeks, with manufacturing activity being widely reported as “as flat or down even as supply chains continued to improve”, heightening fears of a recession in the US economy. 黄金 as a result saw inflows, as the bullion is universally considered to be a hedge against times of economic downturn due to its safe haven status. However, US PMI figures released on Friday painted a different picture, as gold traders saw a U-turn in the markets with fears of a recession being played down and the precious saw outflows as the greenback strengthened, reversing its gains in the previous trading session. It would appear that the contradictory figures have sent gold traders in limbo, as the stronger than expected Manufacturing, Composite & Services PMI figures could provide an indication that the Fed may continue with its rate hiking path, despite the alarm being sounded by the Fed’s Beige Book and the Philly Fed Manufacturing index in regards to a recession. Even though fears of an impending recession cloud the markets, the short–term outlook appears to better than originally forecasted, which tends to provide support for the bullion ahead of this week’s highly anticipated preliminary GDP rate for Q1 和 crucial Core PCE data. Furthermore, we highlight that the US Treasury 2-year and 10-year yields have declined the past week, given that the risk that the US will default on its debt has increased. Therefore, as the US treads closer to its debt ceiling limits, this has facilitated temporary inflows into the precious metal as US treasury bonds are considered to be less attractive alternative, until the debt ceiling is raised by the legislative bodies. Hence, in the event that no progress is made and the US inches closer to the risk of defaulting on its debt, the door may open for further inflows into gold. Overall, as a result of contradicting financial releases and external political implications, it would appear that gold may continue hovering near the $2000 key psychological level until the market has adequate information, in order to reassess and readjust their outlooks. Finally, we also note that the FOMC has entered it’s blackout period, with no policymakers holding speeches until after the Fed’s meeting next Wednesday.

技术分析

黄金/美元4小时走势图

• Support: 1985 (S1), 1950 (S2), 1900 (S3)
• Resistance: 2015 (R1), 2045 (R2), 2075 (R3)

Gold’s price seems to be moving in a sideways fashion, having broken below the upwards trendline on the 19    of April. We tend to maintain a neutral outlook as the price action revolves around the 1985 (S1) level with the RSI indicator staying near reading of 50. However, we highlight the fact that the precious metal has previously broken below S1, which may imply bearish tendencies. For our neutral outlook, to continue we would require gold’s price to stay around the 1985 (S1) level and the 2015 (R1) resistance level with the RSI indicator remaining near 50. For a bullish outlook to occur we would like to see a clear break above the 2015 (R1) resistance barrier and a move towards the 2045 (R2) resistance line. On the other hand, should the bears take over, we would require a clear break below support at the 1950 (S2) level with the next potential target for the bears being the 1900 (S3) support base.

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