On Tuesday, September 3, spot gold fell by 0.4% to $2,496.72 per ounce. The gold price fell to the lowest level in over a week on Tuesday, mainly due to the strong US dollar and the wait for US non-farm employment data, leading to a corrective decline caused by continued high-level selling by investors.

The focus for the remaining time of the year on whether gold will rise or fall lies in the assessment of the possibility of the job market stabilizing or deteriorating rapidly. This will also be the focus of debate for the remainder of the year. Therefore, investors are paying attention to a variety of employment market data to be released this Friday in the US, including the non-farm employment report, ISM survey, JOLTS job vacancies, and the ADP employment report to be released later this week. If the data reflects resilience in the labor market, the Fed may cut interest rates at a more moderate pace, which may lead to a continuation of the current downward trend in gold. Conversely, if labor market data is significantly below expectations, the possibility of further rate cuts will increase, and the extent of the rate cuts will also be aggressive. In the event of the latter, this will have a significant and obvious bullish effect on gold.

Source: E-huitong

On a technical level, from a technical perspective, gold is currently facing a test of key support and resistance levels. In the short term, the gold price needs to hold above the 21-day simple moving average (SMA) of $2480 per ounce in order to maintain bullish prospects. As long as the gold price remains above this level, the bulls still have the potential to drive the gold price further upwards. Currently, the 14-day relative strength index (RSI) is trending downwards, approaching the 50 level, but still within the call range. If the gold price can close above $2500 per ounce by the end of the day, it is expected to continue its upward trend. However, if gold fails to hold the support level of $2480 per ounce and falls below the overnight low of $2472, it may trigger a larger pullback. The resistance converted to support level of $2464 per ounce of the symmetrical triangle will become a key support for the downward movement of gold. Once it falls below this level, the gold price may further test whether the uptrend since August will reverse.

Wang Gang, Bank of China Guangdong Branch

For personal views only, not representative of the views of the organization.