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Fundamentals

During the Asian session on Tuesday (September 5), spot gold fluctuated in a narrow range and is currently trading around 1935. As the US stock market was closed yesterday, no significant data was released. Therefore, the gold maintained its retracement and ended with the third consecutive Doji star at high, which also has a long upper shadow. However, investors should be wary of a possible weakening pullback in the short term. Since the last Fed policy meeting, the published economic employment data further deepened the impression that the US economy is cooling but not in recession fears, which means that the Fed is likely to pause rate hikes. This was also priced in the gold price. If there is no new marginal stimulus, gold and silver may start a correction in the short term. However, it should be noted that this will be a correction only, not a reversal, and the magnitude of the adjustment will not be too large, with the general direction still remaining the oscillation. Currently, the market will gradually focus on the upcoming Fed monetary policy meeting on September 19 and 20.

Data: Eurozone Sentix Investor Confidence for September is -21.5, compared with the expected -20 and the previous reading of -18.9.

News: Christine Lagarde, the ECB President, said that the Eurozone is in an environment of excessive inflation and will return inflation to 2% in time. This leaves the suspense on whether to continue raising interest rates next Thursday. September could be the first pause in the tightening cycle, which might result from the Eurozone intensifying contraction in services activity currently and the sluggish manufacturing sector.

Investors today need to pay attention to the US factory orders for July and the interest rate decision of the Reserve Bank of Australia.

Technical Analysis

Trading at the daily timeframe, gold prices were relatively stable yesterday, with negligible impetus. Yesterday we also highlighted that gold prices will fluctuate between 1935 and 1948, with the lowest around 1936 and the highest around 1946, which finally closed with another Doji star. The market may still be bleak and stable today, and the price will mainly oscillate and fall slowly in a weak trend. Technically, as gold closed in the downtrend on Monday, the daily chart closed negative, holding below the previous high of 1948. Although the price failed to break below the support at MA10, it is very obvious that the gold will maintain fluctuating at a high level, and is trying to transform the previous bullish trend to the bearish. Support below is at the MA10 around 1930 and further support will be at MA20 around 1915. If gold prices break through 1915 below, it may profit from bearish outbreaks. During the day, the oscillation range may move down to 1930-1940, which is between MA5 and MA10.

Traders can mainly go long at low during the day. If the price retraces to around 1928, you can still go long with small positions for the rebound in the short term. The stop loss is 1923. The first target to take profit is 1940, where you can reduce your positions and move the stop loss to break even, and the second target is 1950. If prices rise to around 1943, aggressive traders can also go short with small positions, with the stop loss setting at 1948. The first target to take profit is around 1930, where you can reduce your positions and move the stop loss to break even, and the second target is 1918.

Trading Recommendations

Trading Direction: Short

Entry Price: 1942

Target Price: 1918

Stop Loss: 1947

Support: 1930.000/1915.000

Resistance: 1940.000/1953.000