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Fundamentals

During Monday's (August 7th) Asian session, spot gold oscillated upward, and it is currently trading at 1938. The U.S. employment report released on Friday night was slightly weaker than expected, dragging down the U.S. dollar and U.S. bond yields, and providing some support to the gold. Although the gold was supported and rebounded, due to fading worries about the U.S. getting downgraded and a possible recession, the dollar rebounded slowly, which limited the rebound of the gold. However, the short-term downside risk of gold is weakened, while the rebound opportunity increased. Before the U.S. CPI data is released this week, the market will keep a strong wait-and-see sentiment.

Data: U.S. Nonfarm Payrolls rose to 187,000, lower than the expected 200,000, but higher than the revised June data of 185,000. Additionally, the unemployment rate fell 10 basis points to 3.5%, the lowest level since the end of 1969. The data reflects a "recession level" that may not satisfy the market sufficiently, but it is not "good news".

Today's focus: There is less significant data today, and it is important to focus on the speeches from the Fed officials (at the beginning of the week) and the U.S. CPI data for July.  Today's focus: There is less significant data today, and it is important to focus on the speeches from the Fed officials (at the beginning of the week) and the U.S. CPI data for July.  

Technical Analysis

Daily chart: In Friday's pattern (affected by the Nonfarm Payrolls), as the data was supportive, gold appreciated from not a huge growth, gold is not at a strong pattern this week as it just reversed the decline and then rebounded. How far the gold can rise will be determined this week. Back to the technical analysis, after rebounding last Friday, there were some changes in the cycle, with the Bollinger bands getting closer, the maximum range will be between the Bollinger upper bands and the Bollinger lower bands. For below, gold could reach 1925, and it may touch 1980 above. Currently, 1925 has been reached and gold has rebounded effectively. The oscillations at the Bollinger middle band (1952) are crucial, as gold will not surge higher before getting stable there. Furthermore, 1952 is the double top for last week's consecutive rally, and gold failed to cross through it twice. It is the strong resistance point of the recent gold prices, and once it is broken, gold price bulls can trade more, and gold will rise. Therefore, gold will keep appreciating at the beginning of this week and the first target could be 1952. For today, gold continued to rise in the morning session, but failed to cross above 1946. With the demand of a retracement, it is recommended to go long at lows and keep an eye on the upper resistance near 1952 and the lower support near the 5-day SMA near 1938.

Trading recommendations: There are speeches from Fed officials this week, and gold prices could be affected. Therefore, investors should not chase the ups and downs, and if gold retraces to 1935 today, investors should go long with small positions, and set the stop-loss at 1930. To take profits, investors shall focus on 1945 as the first target, and move the stop-loss to breakeven when gold reaches 1945. Besides, the second target could be 1952. If gold rises to 1955, aggressive investors can go short with small positions, set the stop-loss at 1960 and take profit if gold reaches 1945.

Trading Recommendations

Trading direction: Long

Entry price: 1935

Target price: 1952

Stop loss: 1930

Support: 1929.000/1919.000

Resistance: 1942.000/1952.000