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Daily Brief, Sept 10 – Everything You Need to Know About Gold! 

Good morning traders,

Prices for the precious metal GOLD closed at 1,946.17, after placing a high of 1,950.84 and a low of 1,920.01. Overall, the movement of gold remained bullish throughout the day. On Wednesday, gold prices rose modestly for a second consecutive day and extended their slow recovery from a recent downfall that took gold to the 1,900s. Prices for the yellow metal lost almost 2% last week, after an unexpected rise in the US dollar carried through until Tuesday, ahead of the European Central Bank meeting. Meanwhile, the rising uncertainty in the market helped gold prices to post gains on many factors.

The Southeast Asian foreign ministers kicked off a series of regional summits on Wednesday, in an effort to seek collaboration to fight global threats. Another reason for their collaboration was to de-escalate the tit-for-tat US-China rivalry, as they are the world’s two biggest economies, and they therefore influence the global economy. President Donald Trump has been firing shots at China in the run-up to his November election bid, and his administration has spoken out strongly against Beijing over issues like trade, espionage and China’s maritime conduct.

Washington has blamed Beijing for bullying its neighbors by sending ships close to their offshore energy operations and for their opportunism with regard to the implementation of military exercises and testing of new defense hardware in disputed locations, while rival claimants are struggling against coronavirus outbreaks. However, China claims that their actions are lawful.

The United States has repeatedly riled China by sending warships to the South China Sea and the sensitive Taiwan Strait since mid-August. The US has also blacklisted 24 Chinese entities over their involvement in building and militarizing artificial islands. Recently, the US has banned American companies from working with China, and has announced that it will bring back the main production to America, so that it can use the “Made in America” tag on its products. The US also declared the imposition of sanctions and tariffs on companies that force overseas production or which work together with Chinese companies.

In response to this, the American Chamber of Commerce in Shanghai surveyed 1,400 companies with chamber members. The survey showed that almost 92% of the respondents said that they were committed to remaining in the county, even after the breakdown of US-China relations.

More than 25% of the US firms that were surveyed said that they expected US-China trade tensions to last forever, compared to 17% in 2019. On the other hand, 5% of the respondents said they expected the lingering tensions to end within 3-5 years, compared with 13% in 2019. 14% said that the issue would be resolved within a year. The uncertainty surrounding the US-China relations supported the gains in the yellow metal on Wednesday.

Meanwhile, on the data front, at 12:00 GMT, the US Consumer Credit figures for July showed a decline to 12.2B, compared to the projected 12.9B, weighing on the US dollar, and adding strength in the gold prices. At 19:00 GMT, the JOLTS Job Openings in July advanced to 6.62M against the expected 6.05M, providing support to the US dollar and capping any further rise in gold prices.

On the vaccine front, the final clinical trials for a coronavirus vaccine developed by AstraZeneca and Oxford University have been put on hold, after a test person in the UK developed a suspected adverse reaction. The company reported that it was a routine pause due to a case of an unexplained illness. This raised more uncertainty and fears in the markets, boosting further growth in the yellow metal prices on Wednesday.

On the US stimulus measure front, the Republicans and the Democrats have failed to reach consensus in their talks regarding the next coronavirus stimulus bill. Together with President Donald Trump, the parties agreed to send out the second round of $ 1,200 stimulus checks, but now the chances for continuation of these payments are also dwindling, and this has been weighing on market sentiment, helping to boost gold prices.

Daily Technical Levels

Support              Resistance

1,934.45             1,967.60

1,913.85             1,980.15

1,901.30             2,000.75

Pivot Point:       1,947.00

The precious metal GOLD has violated the resistance level of 1,935, and it is now facing resistance at the 1,949 level. On the higher side, a bullish breakout on the 1,949 level could trigger buying until the 1,958 level. At the same time, the support continues to hold at 1,935 and 1,922. The US Unemployment Claims and PPI data will be the main market mover for gold. Good luck!

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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