Lock Into These Levels And Improvements For Gold Next Week! - News-Credit-Mortgage-Coin


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Saturday, August 21, 2021

Lock Into These Levels And Improvements For Gold Next Week!


Gold prices are regaining their safe haven status.

According to popular analyst Eren Şengezer, XAU/USD is likely to continue to move sideways between clearly defined technical levels.

Investors' focus shifted to Chairman Powell's speech at the Jackson Hole Symposium.

Despite the broad-based USD strength, gold prices remained resilient throughout the week amid the risk-averse market environment that kept the precious metal in demand. The XAU/USD pair edged lower on Thursday after surging to $1,800 in the first half of the week and closed the week above $1,780 almost unchanged.

What happened in the gold market last week?

Disappointing data from China, which showed Retail Sales and Industrial Production grew at a slower-than-expected pace in July, weighed on market sentiment earlier in the week. Additionally, rising geopolitical tensions between the US and China, along with the increasing number of coronavirus Delta variant cases globally, have forced investors to seek refuge in safe-haven assets. Although the USD outperformed its rivals on Monday, gold had no trouble limiting its losses.

On Tuesday, the U.S. Census Bureau reported that Retail Sales fell 1.1% month-on-month to $617.7 billion in July. The market mood remained sour as this pressure came in worse than the market's expectation of a 0.3% decline. On a positive note, the Federal Reserve's monthly publication showed Industrial Production rose 0.9% compared to analysts' forecast of 0.4%, but that reading didn't help the sentiment improve. On Wednesday, the minutes of the FOMC's July policy meeting revealed that some policymakers saw fit to begin preparing for asset reductions soon.

The initial market reaction was the modest weakening of the dollar against its rivals, but the US Dollar Index (DX) regained its traction on the Fed's policy tightening expectations, extending Friday's rally to the 2021 high of 93.72. The U.S. Department of Labor announced on Thursday that Initial Unemployment Claims had dropped to 348,000, the lowest level since March 2020. However, these data were largely ignored by market participants.

What is important for gold prices next week?

IHS Markit will release its August Manufacturing and Services PMI preliminary reports for Germany, the euro area and the US on Monday. Investors expect economic activity in the US manufacturing and services sectors to continue to grow at a strong pace, but they will pay close attention to the details underlying input price pressures. If these reports confirm that inflation will stay higher than expected, the USD may maintain its solid stance. On Wednesday, Durable Goods Orders data from the US will be looked at to give new impetus ahead of Thursday's weekly Initial Unemployment Claims report.

Additionally, the U.S. Bureau of Economic Analysis will release its second forecast for second-quarter GDP growth, which is unlikely to receive a noticeable reaction in the market. Finally, the Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation indicator, will take place in the US economy. On an annual basis, the Core PCE Price Index, which excludes volatile food and energy prices, is forecast to rise from 3.5% in June to 3.6% in July. More importantly, FOMC Chairman Jerome Powell will deliver his speech at the Jackson Hole Symposium at 1400 GMT, suggesting that the market response to the PCE inflation report will likely be short-lived.

Investors will look for new clues as to when the Fed's cuts in asset purchases will start. At the moment, the markets seem to be priced in with expectations of contraction before the end of the year. If Powell adopts a cautious tone and reassures the markets that the dovish outlook will not change for the rest of the year, the USD could come under strong bearish pressure and trigger a rally in XAU/USD. On the other hand, even if Powell refrains from changing the perception of the policy outlook, the downward trend of the pair may remain limited.

What levels can gold prices see next week?

According to popular analyst Eren Şengezer, the Relative Strength Index (RSI) indicator on the daily chart continues to move sideways near 50, confirming the indecision of gold in the short term. On the upside, there seems to be intermediate resistance for gold prices in the $1,790/93 region (static level, 50-day SMA).

A daily close above this level could open the door for additional gains towards $1,800 (psychological level) and $1,810 (100-day SMA, 200-day SMA) for gold prices, according to Eren Şengezer. On the downside, static supports are found at $1,770, $1,760, and $1,750, according to Eren Şengezer.

Here is next week's schedule:


Existing home sales, manufacturing PMI


new home sales


Durable goods orders begin in Jackson Hole.


Unemployment claims, GDP Q2


PCE price index, Fed Chairman Powell scheduled to speak in Jackson Hole.

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