At the end of last week's trading, gold prices XAU/USD were subjected to strong selling operations with losses exceeding the support level of $1,934 per ounce. It rebounded from the resistance level of $1,955 per ounce in the same trading session. The path of upward rebound for gold stopped in the light of the recovery of the American dollar. This is despite the variation in the important and influential American job figures, where it interacted with investors with the last signs before the numbers that the Federal Reserve Bank is determined to continue raising the American interest rate as the American economy is still strong despite its policy.
Overall, the yellow metal posted weekly gains ahead of the long Labor Day weekend, extending its gain since the start of 2023 to date. Now that many people are back from summer vacation, could the price of gold reach $2000 per ounce in 2023?
Gold prices XAU/USD recorded a weekly increase of 1.2%, adding to its 2023 gains of 7.5%. In the same performance, the prices of silver, which is the sister commodity of gold, fell below 25 dollars at the end of last week's trading. The price of the white metal enjoyed a weekly jump of 1.2%, which added to its gains since the beginning of the year 2023 until now by approximately 2%.
It was all about the performance of the markets regarding the American labor market on Friday.
According to official figures, the US economy added a total of 187,000 new jobs in August, up from a downwardly revised 157,000 jobs in July, according to the Bureau of Labor Statistics (BLS). It exceeded this agreed estimate of 170,000. The American unemployment rate rose to 3.8% after it was 3.5%. The labor force participation rate rose to 62.8%, the average weekly working hours rose to 34.4, the average hourly wage slowed to 4.3% on an annual basis, and the unemployment rate under the age of six rose to 7.1%.
Among other economic data, the American Manufacturing Purchasing Managers' Index from ISM and S&P Global registered at 47.6 and 47.9 respectively. And spending on construction rose by 0.7% in July, compared to 0.6% in June.
As the US labor market continues to slow, it is unclear whether this will have any effect on monetary policy. The futures market continues to head towards a pause in interest rates at this month's Federal Open Market Committee (FOMC) meeting. Meanwhile, the US Treasury bond market was mixed in performance and the US Dollar Index (DXY) gained strength. According to the performance, the yield on ten-year bonds rose by 8.6 basis points to 4.177%. The two-year bond yield rose one basis point to 4.868%, while the 30-year bond yield rose 8.9 basis points to 4.293%.
The US dollar index DXY rose by 0.58% to 104.22, from opening at 103.62. In general, the dollar index DXY recorded a weekly increase of 0.2%, bringing its gain since the beginning of the year to approximately 0.7%.
Gold is sensitive to interest rate movements because it affects the opportunity cost of holding the bullion that does not yield a return. Similarly, the rise of the US dollar is considered a bad thing for dollar-denominated goods because it makes their purchase more expensive for foreign investors.
As for the other metal markets, copper futures rose to $3.8065 per pound. Platinum futures fell to $969.50 per ounce. Palladium futures rose to $1,231.50 an ounce.
Technical analysis of gold prices:
- The XAU/USD gold price continues to trade at a few levels above the 100-hour moving average line.
- As a result, the price seems to be approaching the overbought levels of the RSI on the 14-hour frame.
- In the near term and according to the performance on the hourly chart, it seems that the gold price XAU/USD is trading within a limited bearish channel.
- However, the MACD seems to be about to initiate an upward crossover indicating a shift in market sentiment from bearish to bullish.
Therefore, the bulls will target extended bounces at around $1947 or higher at $1951 per ounce. On the other hand, the bears will be looking to pounce on pullbacks around $1939 or below at $1935 support.
In the long term and according to the performance on the daily chart, it seems that the gold price XAU/USD is trading within an ascending channel. It also looks like the daily MACD has recently completed a bullish cross indicating bullish sentiment. Therefore, the bulls will be looking to ride the current winning streak towards $1964 or higher to $1987 per ounce. On the other hand, the bearish speculators the bears will be looking to take profits at around $1925 or lower at the $1902/ounce support.
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