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Fundamentals

During the Asian session on Friday (August 4), spot gold fluctuated to the upside and is currently trading around 1935. US Treasury yields continued to recover yesterday, with the 10-year yield rising to 4.198% on the day, which is the highest level since November. The yield on the 30-year bond rose 14 bps overnight to 4.30%, which is another high since 4.42% in October 2022, supporting the Dollar Index higher to the 102.9 line. The overnight US manufacturing data was not ideal, indicating an attempt for the US economy to go weak. As a result, the dollar index slid lower, and gold prices were supported. However, the market is waiting for the US non-farm payrolls report for July tonight. The explosive ADP data has raised concerns that the July non-farm payroll data would exceed expectations to the upside. This makes the intraday rebound space of gold prices limited and overall in a weak state. The range of volatility is relatively small, with the lowest fall to the 1929 line and the highest rebound to the 1939 line. Currently, gold prices are still in the process of phased adjustment, and are keeping an eye on the landing of Non-Farm payrolls.

Data: The US ISM Non-Manufacturing index fell to 52.7 in July. US initial jobless claims last week were 227,000, compared with the expected 227,000 and the previous value of 221,000. The number of continuing jobless claims for the week of July 22 was 1.7 million, meeting market expectations. Eurozone PPI fell 3.4% YoY in June, which is the sharpest decline since June 2020.

Data for investors to watch today include the US Non-Farm payrolls report due tonight, which could affect the Fed's policy stance.

Technical Analysis

Trading at the daily timeframe, both bulls and bears of the gold trend were weak, fluctuating repeatedly at a low level, with the highest below 1939 and the lowest above 1929. Although every rise and fall has formed a broken pattern, none of them succeeded. The market is waiting for the August Non-Farm payrolls before prices can fluctuate significantly. Currently, gold prices show signs of bottoming in the 1930 line, which is also the digestion of the previous two days. However, gold prices are still below the moving average band and maintain a weak trend. If the non-farm payroll is slightly better than expected tonight, then gold prices may fall below 1930, further extending the downside revision space, and lower support will be at the 1919 line. If the data is greatly better than expected, gold prices do not rule out another fall to the 1905 line. On the contrary, if the data falls short of expectations, gold prices will be able to rebound with support or even reverse the trend. Above the price will compete for the 1952 position. Once the gold price stands above the moving average, the price may return to a strong trend. After Thursday's slight decline, the daily chart is currently closing a small Doji Star at a low level. Gold prices may be able to rebound in the near future. During the day, the lower support initially looks at the 1929 line which is yesterday's low, and the upper resistance looks at the MA5 at 1942.

Since the non-farm payrolls tonight will have a very large impact on the market, conservative investors can temporarily watch the gold trading in the Asia-Europe session, while aggressive investors can focus on the oscillation in the 1930-40 range buying low and selling high. Perhaps the oscillation range will expand to 1919-1952 when the data comes out.

Trading Recommendations

Trading Direction: Long

Entry Price: 1919

Target Price: 1952

Stop Loss: 1915

Support: 1929.000/1919.000

Resistance: 1942.000/1952.000