Gold forecast: What now for gold after scoring 7 monthly gain?I expect gold to rise further and continue to attract buying activity on any dips. One reason is that the overall trend remains bullish, which should deter bearish speculators from acting too forcefully unless there are clear signs of a reversal.
Gold finished higher for the 7th consecutive month in August, meaning that the precious metal is now up a solid 21% year-to-date. Will it be able to rise further in September or take a breather? The gold forecast will now depend at least partly on incoming US data and interest rate expectations. I continue to maintain a bullish view on the metal thanks to a favourable macro backdrop and its steady-as-she-goes price action.
Gold forecast: Can XAU/USD continue rising?
I expect gold to rise further and continue to attract buying activity on any dips. One reason is that the overall trend remains bullish, which should deter bearish speculators from acting too forcefully unless there are clear signs of a reversal. Additionally, there are few fundamental reasons to short sell gold at the moment. In fact, some argue that gold is still undervalued, considering the significant devaluation and loss of purchasing power of fiat currencies worldwide due to high inflation, which remains persistent in some regions. While disinflation is evident in the US and other areas, it's not the same as deflation. Prices are still increasing, just not as rapidly as before. Demand for gold as an inflation hedge should continue to offer support. Moreover, the sharp decline in bond yields in the last couple of months, driven by expectations of rate cuts by the Federal Reserve, is likely to benefit low or zero-yield assets like gold. As long as we don’t see a reversal in the that trend, lower yields should argue against a sustained period of weakness for gold and silver.
Dollar in focus ahead of busy week
The US dollar is facing a key test this week with the release of several market moving data releases, including the August jobs report.
Following today's US Labor Day holiday, the US data schedule becomes busier, featuring ISM manufacturing data on Tuesday, JOLTS job openings on Wednesday, ADP employment data, jobless claims, and ISM services on Thursday, and culminating with the key event of the week, the August jobs report on Friday.
Out of all of these data releases this week, the nonfarm jobs report should be a key determinant of whether the dollar’s two-month dollar bear trend extends or whether range bound price action will return.
Gold bulls will need to a weaker number to send the metal sharply higher. But if the consensus is correct regarding Friday's jobs report, which predicts 165,000 job gains and a decrease in the unemployment rate to 4.2% from 4.3%, then the market will likely solidify expectations for a 25-basis point rate cut to start the Fed's easing cycle on September 18. In this scenario, I would expect to see a modest weaker reaction in gold at least.
However, if payrolls only increase slightly, say by around 100,000 or so, with the unemployment rate potentially rising too, then in this scenario, the dollar could resume lower, sending gold sharply higher as expectations shift back toward a 50-basis point Fed rate cut in September.
China concerns linger
Meanwhile we have had some mixed PMI readings from China’s manufacturing sector in the last couple of days, leaving investors guessing about the health of the world’s second largest economy. While the official manufacturing PMI fell further into contraction at 49.1 in August from 49.4 in July, the Caixin PMI improved to 50.4 from 49.8 the month before. Meanwhile, the official non-manufacturing PMI ticked up to 50.3, suggesting that perhaps the Chinese economy may have bottomed out.
We will need to see further evidence of a Chinese recovery. If so, this will help raise hopes that elevated demand from the world’s top gold consumer nation can sustain precious metals prices at these levels or even push them higher.
Gold forecast: technical analysis and trade ideas
The steady grind higher is precisely what the bulls would like to see, keeping the technical gold forecast bullish. Shallow dips, higher highs, higher lows are characteristics of strong bullish trends.
So, the trend is clearly bullish and will remain that way until we see a lower low form. Dips are likely to find support around broken levels such as around the old record high from July at $2483, where we also have the 21-day exponential moving average converging. The bullish trend line that has been in place since February, comes in around $2450, representing another short-term support level to watch.
On the upside, there is only one prior reference point to watch given that the metal is trading near its all-time high. And that level is the all-time high itself, hit last month at $2531.
-- Written by Fawad Razaqzada, Market Analyst
Jolts
ECB Rate Cut Looms: EUR/USD Set to Slide?Given the increasing likelihood that the ECB will cut rates before the Fed, further EUR/USD depreciation could be anticipated in the coming days/ weeks. A move below the 100-day moving average would have traders looking toward the 200-day moving average of 1.0853.
However, weaker jobs data from the US this week is tempering this expectation, which means some upside targets can be charted still. If bulls maintain control, EUR/USD may test the June high of 1.0916, followed by the three peaks of March, before reaching the crucial 1.1000 level.
The JOLTs job openings report showed a decline of 296,000 from the previous month, dropping to 8.059 million in April 2024. This is the lowest level since February 2021 and below the market consensus of 8.34 million.
The ADP Employment Change report revealed that private US hiring in May increased by 152,000, falling short of the estimates of 175,000 and below April’s figure of 188,000.
Next up is the NonFarm Payrolls report on Friday. For the exact date and time, import the BlackBull Markets Economic Calendar to iCloud, Google, or Outlook to get alerts directly to your inbox, enabling you to plan your positions in advance.
Dollar Watch: JOLTs, ADP, NFP Dollar Watch: JOLTs, ADP, NFP
It's US jobs week. Which gives us at least three trading opportunities, scattered out nicely over the whole week.
First is the JOLTs Job Openings report.
Second is the ADP Employment Change report.
Finally, we have the Nonfarm Payrolls (NFP) report.
Let's look at what happened last month:
Nonfarm payrolls increased by 175,000 jobs. Economists forecast by TradingEconomics had estimated 240,000 jobs.
Another huge miss in the NFP report this month could weaken the dollar. The market seems poised to interpret any indication as a signal that the Federal Reserve might cut rates sooner than anticipated.
And even with a weaker-than-expected NFP, the market might just be looking at the headline. JPMorgan Chase highlighted during last month's report that "other employment indicators suggest there is no imminent weakening in the labor market." Additionally, these figures are preliminary and often revised in subsequent weeks. For instance, March’s nonfarm payroll gains were revised up to 315,000 from 300,000.
Strifor || AUDUSD-Mid-term viewPreferred direction: BUY
Comment: The aggressive behavior of buyers of the American currency forced the prices of the main competitors of the USD to decline at the beginning of the week. This affected the euro and pound to a greater extent, but the currencies of the Pacific region also sank. Nevertheless, we continue to adhere to the buy priority in the medium term, especially since we previously did not exclude another potential drawdown.
AUDUSD long is considered according to two main scenarios. Less likely, scenario №2 assumes growth from current prices, while scenario №1 assumes growth after a slight downward drawdown. It should be noted that purchases according to scenario №2 are already active, and continuing to accumulate a long position is a good step for today.
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Strifor || USDCHF-Mid-term viewPreferred direction: SELL
Comment: For the Swiss franc , we continue to follow the buy-priority. Scenario №1 , which we previously published, is already in progress, however, the strengthening of the US dollar at the beginning of this week will most likely lead to the activation of scenario №2 . We also assumed this, and given the fact that the franc is currently far from the most stable currency against the US dollar , the next update of the maximum is quite expected.
Therefore, medium-term short-term sentiment for this pair remains. The target for the fall is at the level of 0.89000.
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Strifor || NZDUSD-Mid-term viewPreferred direction: BUY
Comment: The New Zealand dollar almost completely copies the situation with the Australian dollar . Here, we also continue to adhere to buy-priority in the medium term. It should be noted that both of these currencies are currently having the best setup for buy among others majors, but even this does not exclude potential short-term weakening. This probability is precisely described on the graph in the framework of scenario №1 , which is more likely at the moment, but scenario №2 is also already in the works.
Just like in AUDUSD , we continue to accumulate long positions with a medium-term target at the level of 0.60713.
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JOLTS - Job Openings come in lower than expectedJOLTS - Job Openings
Rep: 8.863m 🚨Lower than Expected 🚨
Exp: 8.900m
Prev: 8.889m
Long Term Trend (DOWN)
Since May 2022 we have remained in a downward sloping channel reducing from 11.85m to current day 8.863m in job openings (see channel on chart).
Shorter Term Trend (Turning Down)
The number of job openings went down by 26,000 from the previous month to 8,863 million in January 2024, the lowest in past three months and below the market consensus of 8.9 million.
Recent Months Movements
OCT - 8.690m (Local Low)
NOV - 8.930m (Local High) ~240,000 Increase
DEC - 8.889m (Lower) ~ 41,000 decrease
JAN - 8.863m (Lower) ~ 26,000 decrease
The hardest hit sector in the JOLTS Job Openings report was Retail with 170,000 less job openings than in Dec 2023 👀
Could this be staff let go in January 2024 after the Christmas retail rush?
Interestingly, on Monday the Johnson Redbook Index noted an increase from 2.7% to 3.1% in retail sales suggesting that sales from retail stores increased slightly last week.
The Redbook Index provides the YoY percentage increase or decrease of USD in retail sales in the United States (it is released weekly for the week that just past).
Currently the Redbook Index is oscillating around the average 3.59% level on the chart for retail sales. The Index currently illustrates that we are in moderate retail sales channel and this might reinforce that the 170,000 reduction in retail Job offerings may be seasonal.
Please review Macro Monday from this week for a full review of the Redbook Index and its chart history.
Thanks folks
PUKA
Monthly Job Openings, Bear AwakeningLooking at Job Openings data, bear markets end when RSI is below 30, we've just now crossed below 50, we have a long way to go.
I think Job Openings need to fall to roughly 1/3 of the current level to 3mil or so down from 9mil, which would still be quite a bit higher than previous bear market bottoms.
Equity levels will most likely follow right along.
AUD/USD Forecast : 12h TA : 05.03.22This chart examines potential trading positions , and everything is clear on the chart , but just in case ig you had any doubt or questions pls feel free to ask .
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👤 Arman Shaban : @ArmanShabanTrading
📅 05.03.2022
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