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Abstract: In the early morning session in Europe, the price of gold lost momentum around US$1,955. With the overall strength of the USD, the price of gold faces some subsequent selling pressure.

Fundamentals

The recent coup in Niger distorted the normal performance of the gold market and showed an unwelcome rebound. At present, the bears have returned. Now let's focus on the US$1,950 level and possible bullish opportunities in the 4H timeframe. If it falls below US$1,940, the short-term bearish scenario (the target of US$1,925-1,930) is still intact. Otherwise, the price of gold may return to the range of US$1,980.

Despite recent fluctuations, the gold market continues to maintain firm support at around US$1,950. Technically, December gold futures bulls have a slight overall short-term technical advantage. The bulls' next upward price target is that the closing price breaks through the solid resistance level of US$1,975, and then US$1,980. The next short-term downside price target of the bears is to push the price below the solid technical support level of the June low of US$1,939, and then US$1,933.

The starter culture in data may push the price of gold to fluctuate within the range. Today's attention will focus on the US ISM Purchasing Managers Index. The index has been on a downward trend since last spring. If the data is still in the contraction range, this may seriously inhibit positive economic sentiment, thus bringing impetus to the gold price. In other words, it may take a series of disappointing economic indicators to trigger the upward trend of prices. We expect that the gold price will continue to test close to US$1,980 in the New York session.

Technical Analysis

Over the past two weeks, gold prices have been forming lower lows and lower highs, with the 50-day SMA and the 20-day SMA, which approached US$1,1942 on Friday, once again preventing a significant decline.

Gold is now back at the 20-day SMA again, so will the bulls trigger again from here? We think the case is yes; although the negative trajectories of the RSI and MACD reflect continued weak demand. However, structural moves may drive a rebound in gold prices.

As with our charts, further declines are not supported, and prices could initially break above the European session lows of US$1,955 first, followed by US$1,964 for an eventual test of the US$1,980 area.

On the downside, bears have to break below US$1,942 and then will be closely watched in the US$1,939-1,933 range, which contains the short-term SMAs, the tentative uptrend line from the June lows as well as the upper rail of the channel. 23.6% Fibonacci retracement is also placed there. Therefore, a break below this zone could trigger a sharp sell-off in the 1,892-1,900 range, where the 200-day SMAs converge. Further decline could stop between US$1,860 - 1,855 range.

Overall, gold prices are showing mixed signals at the moment and the bulls need to remain patient until gold stops falling at the previous low of US$1,942. It is recommended to buy the dips within the range.

Trading Recommendations

Trading direction: Long

Entry price: 1945

Target price: 1980

Stop loss: 1933

Deadline: 2023-08-15 23:55:00

Support: 1942, 1933, 1927

Resistance: 1955, 1964, 1970