Gold: Your Trading Game Plan for The Week Ahead

4 сент. 2023 г.

Overview

Gold is currently tracking higher within a small ascending channel – fuelled by the anticipation that the Federal Reserve will halt its interest rate hikes. This expectation is rooted in a series of underwhelming U.S. economic indicators, suggesting constrained potential for additional rate hikes.

Nevertheless, the unexpectedly robust nonfarm payroll data released on Friday has propelled the U.S. dollar to recent highs, potentially posing a challenge for gold's performance in the upcoming week.

Spot gold daily candle chart:


Scenario 1: Bullish continuation

• The ascending channel is well established, and without any major resistance levels prior to $1,979, our first game plan scenario is one of bullish continuation. Traders could look to position themselves within the channel with a view to riding a potential rally towards key resistance at $1,979.

Scenario 2: Bearish break of channel

• With the U.S. dollar strengthening following Friday’s nonfarm payrolls, traders should not rule out a break of the ascending channel. Should we see a decisive break and close below the ascending channel, this could open the door for a retest of support at $1,882.

Managing risks

On average, the gold market moves up or down by $44 in a week and by $16 dollars in a day. This is taken from gold’s average true range (ATR) and can be used to calibrate your stop loss and profit target expectations.

In terms of upcoming economic news that could impact the price of gold, on Wednesday we have U.S. services PMI data for August and U.S. initial jobless claims on Thursday.

Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.