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Fundamentals

Spot gold oscillated higher during the Asian session on Wednesday (August 2nd), and it is currently trading near 1948. Besides, the overnight data showed solid U.S. manufacturing and construction situations, overshadowing the impact of job openings fell to its lowest level in more than two years. As expected, gold prices fell sharply from the highest level (1966) to 1941, but yesterday, the rise in U.S. bond yields is a significant impact that led to the decline in gold prices. On Tuesday, the U.S. 10-year Treasury bond yields reached 4.029%, a new high since July 10th. At the same time, the 2-year Treasury bond yield is 4.891%, a difference that reached 86 basis points, which is the highest level since July 13th. Also, with the ending of the U.S. interest rate hike, there are bull baits in the U.S. bond market, which could continue for many days, but investors should not be pessimistic about gold, and instead should pay attention to support near 1941.  

Data: U.S. June JOLTS reported job vacancies of 9,582,000 people, a record low since April 2021, slightly less than the expected 9.6 million people. With the U.S. June JOLTS job vacancies hitting a more than two-year low, the labor market conditions have weakened. Moreover, the Markit U.S. Manufacturing PMI final value came in at 49 in July, in line with expectations. The initial value of the latest ISM report continues to confirm that the U.S. manufacturing sector is in trouble. Meanwhile, Eurozone manufacturing PMI final value was 42.7 in July, the expected and initial values were both 42.7, and the final value for June was 43.4.

Today's focus: Swiss Q3 Consumer Confidence Index-SECO (after seasonal adjustment), US ADP Employment Change for July, US EIA Crude Oil Stocks Change for the week ended July 28th, and US EIA Gasoline Stocks Change for the week ended July 28th.

Technical Analysis

Daily chart: Technically, the decline yesterday met the demand for technical depreciation. Furthermore, gold was stopped at the upper area of the descending channel and dropped. It gained support and rebounded from the lower area, with the highest level sitting at 1966 and the lowest level located at 1940, in line with our expectations. Gold appreciated in the morning session, and it is currently moving to the 20-day SMA (1953) without crossing through it (for the second time). Despite a weak pattern, the risks are released, and the upper space will bring a rebounding demand, setting gold in oscillations again. Although the SMAs are opening downward with a weak pattern, it is risky to cross below 1940 if gold keeps the weak pattern today. If gold loses here, it will oscillate further to seek the bottom. Since the recent market is led by the Nonfarm Payrolls expectations, the ADP data tonight will affect the short-term trend as well. If gold rebounds and grows slowly today, investors should go long at lows.

Trading recommendations: Buy lows and sell highs in the range. Yesterday, the gold pattern met our expectations with the highest level sitting at 1966 and the lowest level located at 1941. If gold rebounds to 1958 today, investors could go short in the near term and set the stop-loss at 1962. To take profits, investors should move the target to 1945, move the stop-loss to breakeven and set the remaining positions to 1940. If gold retrace to 1945 today, aggressive investors could go long shortly and set the stop-loss at 1940. Besides, the target to take profits will be 1960.

Trading Recommendations

Trading direction: Long

Entry price: 1943

Target price: 1958

Stop loss: 1939

Support: 1940.000/1930.000

Resistance: 1958.000/1966.000