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Abstract: Last week, the gold market was dominated by buying tone, with some weakness only on Thursday and Friday. This momentum has intensified the selling pressure this week. At present, the market continues to pay attention to the speeches of Fed policymakers to gain a deeper understanding of the central bank's interest rate hike path.

Fundamentals

After a strong rebound last week, the price of gold continued to fall this week. In the case of a depressed market, the price of gold still fluctuated before the release of key data in the U.S. In this process, people hope to take more stimulus measures to the real estate industry because the market is concerned about Beijing's economic slowdown and the hawkish statements of Fed officials. Therefore, it is reasonable to prove that China's latest optimism collapse (favorable for the USD) is the reason why gold prices are difficult to rise.

The recent optimistic employment and economic data in the U.S. defended the Fed's preference for "long-term high-interest rates" and the hope of a soft landing in the U.S., which in turn supported the USD and suppressed the price of gold. In other respects, strong yields and the USD, as well as tensions between China and the U.S., also put downward pressure on market risk appetite and gold.

Looking into the future, although the price of gold has declined this week, selling pressure continues to push the price down, but the spot premium that continued to rise last week may push the price to gain rebound momentum when trying to test the starting point of the rebound in the previous period (US$1,915). Testing this range again may provide buying opportunities until the recent resistance area is US$1,935. On the downside, US$1,913 is the direct support level, followed by US$1,904. If the gold price falls below the integer threshold of US$1,900, the decline will quickly extend to the downward range of US$1,857.

Technical Analysis

The price of gold rose strongly last week. This week, due to the continuous rise in bond yields, the price of gold continued to fall. As a result, the price of gold withdrew from the rising channel in the 4H timeframe, and it was adjusted back to near the previous rising point, facing new selling pressure. At present, the market rebounded around the Fibonacci retracement of 38.2% in the downward trend from 1,987 to 1,884, but the technical signal was not optimistic.

Although stochastic is signaling oversold, the falling Relative Strength Index has yet to fall below 30, while the MACD has started a new downtrend below the 0-axis. This makes the market continue to be bearish and could push gold prices down to the 1,910-1,915 range. If the bears break below the psychological threshold of 1,900, the focus will be on the 5-month lows in the US$1,884 range. However, as mentioned earlier, we prefer gold to get a bounce in that range to recover the losses of the past few sessions. If not, the foundation will fail.

Overall, there is a risk that gold will continue to fall back to the 1,900 range. However, with technical indicators showing oversold conditions, the bulls may get a break. It is recommended to buy the dips.

Trading Recommendations

Trading direction: Long

Entry price: 1916

Target price: 1935

Stop loss: 1903

Deadline: 2023-09-19 23:55:00

Support: 1915, 1913, 1903

Resistance: 1925, 1930, 1935