Amid a volatile precious metal market, Gold prices have been caught in a storm of wild, directionless swings. The recent Nonfarm Payrolls report added fuel to the fire, triggering a sharp 4.5% drop in Gold to a low of $2364.69 per troy ounce. While some technical indicators hint at an uptrend, the market's stability hangs in the balance. A decisive breach of the $2353.10 support level could spell further declines despite Gold currently holding above its 50-period Exponential Moving Average (EMA) and showing momentum above the 100 baseline. However, mixed signals from the Relative Strength Index (RSI) suggest a weakening bullish momentum, with a potential bearish reversal on the horizon if key support level fails. As traders navigate this uncertain landscape, attention will be keenly focused on identifying both potential upside and downside targets.
Overview
Amid a volatile precious metal market, Gold prices have been caught in a storm of wild, directionless swings. The recent Nonfarm Payrolls report added fuel to the fire, triggering a sharp 4.5% drop in Gold to a low of $2364.69 per troy ounce. While some technical indicators hint at an uptrend, the market's stability hangs in the balance. A decisive breach of the $2353.10 support level could spell further declines despite Gold currently holding above its 50-period Exponential Moving Average (EMA) and showing momentum above the 100 baseline. However, mixed signals from the Relative Strength Index (RSI) suggest a weakening bullish momentum, with a potential bearish reversal on the horizon if key support level fails. As traders navigate this uncertain landscape, attention will be keenly focused on identifying both potential upside and downside targets.
Key Economic Events
Wednesday 02:00 pm (GMT+0) - Canada: Ivey PMI (CAD)
Thursday 03:00 am (GMT+0) - New Zealand: Inflation Expectations q/q (NZD)
Thursday 12:30 pm (GMT+0) - USA: Unemployment Claims (USD)
Friday 12:30 (GMT+0) -Canada: Employment Change (CAD)
Technical Analysis
The precious metal market has been experiencing high volatility, with "wild" swings in a trendless direction. The disappointing Nonfarm Payrolls report on Friday had a significant impact on global financial markets, causing the price of Gold to drop by more than 4.5% to a daily low of $2364.69 per troy ounce. Despite technical indicators suggesting an uptrend, if the key support level of $2353.10 is decisively breached, it could lead to further price declines. Currently, the price of Gold is above the 50-period Exponential Moving Average (EMA), and the Momentum oscillator indicates an uptrend with values above the 100 baseline. However, the Relative Strength Index (RSI) is sending mixed signals as it has dropped below the 50 line, suggesting weakness in the bullish momentum. A decisive breach of the price level at $2353.10 would complete a bearish reversal pattern known as a failure swing, signaling the start of a downward trend in the market.
Potential Upside Targets
If the bulls manage to maintain control of the market, traders may consider the following four potential upside targets:
2392.88: The first price target is 2392.88, which matches the peak on July 5.
2489.80: The price target for the second objective is 2489.80, reflecting the (PP) Pivot Point calculated using the weekly Pivot Points method.
2458.78: An additional resistance level is set at 2458.78, corresponding to a daily high recorded on August 5.
2483.70: The fourth resistance is 2483.70, representing the all-time high reached on July 17.
Potential Downside Targets
If the bears manage to take control of the market, traders may find potential opportunities in the following four downside targets:
2353.10: The initial level of support is identified at 2353.10, corresponding to the trough of the bearish failure swing.
2339.85: The second downside target is expected to be 2339.85, which corresponds to a daily high marked on June 28.
2321.73: The third line of support is estimated at 2321.73, which aligns with the (S2) support calculated by using the weekly Pivot Points method.
2286.75: An additional support level is estimated at 2286.75, representing the beginning of the rally.
Fundamentals
In July, the unemployment rate increased to 4.3%, and nonfarm payroll employment rose by 114,000, according to the U.S. Bureau of Labor Statistics. Employment grew in health care, construction, transportation, and warehousing but declined in the information sector. The household survey indicated an increase in the number of unemployed people and those working part-time due to economic reasons. Additionally, the establishment survey reported slower job growth compared to the average monthly gain over the past year. As a result of this and geopolitical tensions, financial markets crashed, causing Gold to decline to 2364.29, marking a decrease of more than 4.5%.
Conclusion
In summary, the precious metals market, particularly Gold, remains highly volatile amid recent economic data and geopolitical tensions. While technical indicators suggest a potential uptrend, the stability of Gold prices is precarious, hinging on the critical support level of $2353.10. A breach of this level could signal further declines despite the current momentum above key technical tools. As traders navigate these turbulent waters, attention will remain on both economic events and technical signals to gauge the market's next direction.