On Thursday (August 29), although the data released by the United States shows that the US economy is maintaining resilient growth, the spot gold still rose by 0.9% and closed at $2,524.45 per ounce. Gold continues to defend its position at a high level.
Thursday's data shows that according to the revaluation by the Bureau of Economic Analysis, the US GDP growth rate in the second quarter increased by 3.0% on a quarterly basis, which is higher than the initial value of last month's report and the prediction of 2.8% growth by Reuters economists, while the first quarter was 1.4%. Another report showed that in the week ending August 24, the number of initial jobless claims in the United States decreased by 2,000 people, adjusted for seasonal factors, to 0.231 million people, which is close to the forecast of 0.232 million people by Reuters economists. The number of continuing jobless claims, which measures recruitment, increased by 0.013 million people, adjusted for seasonal factors, to 1.868 million people, close to the level at the end of 2021. Although the data seems good, there doesn't appear to be much improvement in the job market. The Department of Labor also added that the unemployment rate in August may still be high. Therefore, Thursday's data did not ease the market's expectation of a rate cut by the Fed. The only question now is the extent of the rate cut and how many times it is expected to be cut this year. Since Fed Chairman Powell made it clear last Friday that a rate cut is imminent, acknowledging that inflation is expected to return to its target range and that there may be concerns about the job market, the market is already 100% certain that the Fed will start cutting interest rates in September, and the high interest rate cycle of the US dollar will begin to turn. Investors are currently focusing on Friday's Personal Consumption Expenditures (PCE) Price Index, which is the inflation indicator favored by the Fed. If the data shows a downward trend, gold will gain momentum to rise higher.
Source: E-huitong
From a technical perspective, on the daily chart, we can see that due to the lack of market catalysts this week, gold's progress seems to be hindered at $2531. However, the Bollinger Bands remain upward and the gold price remains within the upward channel, indicating that the gold bulls still have the advantage. On the 4-hour chart, the gold price is trapped in a narrow range consolidation pattern at a high level, and the directional indicators are not clear. Currently, the gold price is oscillating within the range between the support level at $2480 and the resistance level at $2531. However, once there is an important event to drive it, gold is likely to quickly break out of this narrow range consolidation pattern. It is necessary to closely monitor the results of the evening's US core Personal Consumption Expenditures (PCE) Price Index, which reflects inflation. The expected data result is likely to cause significant volatility and break the recent narrow range consolidation pattern.
Wang Gang, Bank of China Guangdong Branch
For personal views only, not representative of the views of the organization.