Gold prices have been on the rise again during yesterday’s session with US traders coming back after the Labour Day holidays to news on Brexit and trade war risks. There has been growing pessimism over global growth as a whole and the prospects of an imported recession for the US economy. Yesterday's data from the US in the ISM is a key measure of what the market can use to assess the economy by. The ISM manufacturing index arrived at 49.1 for August versus 51.2 in July which was the first sub-50 reading since August 2016 and is the weakest figure since January 2016. "This is a clear disappointment that will provide further fuel to the market and President Trump’s desire for further Federal Reserve interest rate cuts," analysts at ING Bank argued. However, gold is not bid solely on the US Dollar falling by just -0.09% in the DXY, there are greater risks at play which include both Brexit and trade wars. September was supposed to be the month where US and Sino negotiators got together but there has been little sign of any advancement here which is rattling the cages of the bears and concerning to investors. Meanwhile, Brexit is back tot he fore and also of concern.
The price of the yellow metal has risen from a low of $1521 to a high of $1549.73 during yesterday’s session after gaining traction and breaking above the $1544.49 support level. The price is currently still trading just below the highs as the momentum turned extremely bullish with a lot more room to go before entering the overbought zone. We will be focusing on the upside and this time we will be expecting the price to hit a new yearly high.
Support: 1533.63 / 1524.15
Resistance: 1544.49 / 1556.25