NON-FARM Payrolls Day: SPOT GOLD Price projection & analysis: XAUUSD: $1900/1888 or $2030/2048 in next 10 days?
Key Fundamentals & EVENTS IMPACTING SPOT GOLD in July 2023:
- FOMC Minutes: FOMC minutes (16th August, 2023) highlight inflation concerns persist. Despite decelerating price pressures and signs that labour market conditions are beginning to improve, the Fed has left the door open to further rate hikes. Since then, the “soft landing” narrative has gained popularity, and financial markets expect the Fed to ease policy in the first half of 2024 as a result.The economy is expected to slow notably over the second half of the year despite signs of resilience. The Fed will continue to monitor the incoming data closely, since the full effect of their previous tightening remains unclear, as well as the risk of overtightening. Since the federal funds rate has now reached restrictive territory, we believe the Fed is likely to maintain rates in restrictive territory until there is clear evidence that inflation will reach its target of 2% within a reasonable period.
- BOJ: Japan’s financial regulator will closely monitor how central bank policy impacts regional banks, as the world’s third-largest economy approaches the normalisation of its monetary settings after years of massive easing. The Bank of Japan last month modified its yield curve control (YCC) scheme and allowed interest rates to rise more flexibly, a measure officially targeted to sustain easing but seen by markets as a prelude to dismantling decades of stimulus. Higher interest rates could increase unrealised losses on domestic bonds held by Japanese banks, although such losses could be offset by stronger net interest margins from their lending business. “Japan is trying to emerge from 25 years of deflation. The decision (on when to end low rates) will take time,” Nakamura said. Under its yield curve control (YCC) policy, the BOJ guides short-term interest rates at minus 0.1% and the 10-year government bond yield around 0% to reflate economic growth and sustainably achieve its 2% inflation target.
- CHINA: There were some positive indicators in the latest official PMI data. The manufacturing index rose slightly from 48.8 to 49.7, marking the third consecutive increase since May’s trough. However, it remains below the 50-level associated with expansion, so it simply represents a moderation of decline.On Thursday, China’s central bank conducted seven-day reverse repos worth 209 billion yuan (about 29.1 billion dollars). People’s Bank of China announced the move to keep liquidity in the banking system stable at the end of the month. A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future. Also, PBOC lowers down payment for First, 2nd Time home buyers. Existing Mortgage rates can be lowered from September 25th, 2023. Foreign investors’ selling in China shares at record pace in August was observed and reported by various media hubs. Outflows of $12bn came out as Beijing’s support measures failed to offset fears over economic slowdown and property crisis.
- ECB: “The monetary policy account from the ECB’s July meeting did not offer much guidance on what the ECB would do at its September meeting. The activity data since the July meeting has been weak, while inflation has proved to be sticky. In fact, stagflation risks were mentioned twice in the account. A few of the more hawkish Governing Council members have talked in favour of another hike lately, while most, including Executive Board member Schnabel Thursday, have kept an open mind and mentioned: “We stick to our long-held baseline that rates have peaked at 3.75%, and think the ECB will pause hiking in September, while retaining a tightening bias. It will be a close call, though, and there may be an intense battle ahead between those in favour of hiking and the ones wanting to keep rates unchanged at the ECB’s September meeting.”
- FED : Powell acknowledged the economic backdrop is more favourable now than it was a year ago. But he made it clear the US central bank is prepared to raise interest rates further if needed, noting that a resilient economy comes with risks that inflation could reaccelerate. “At upcoming meetings, we will assess our progress based on the totality of the data and the evolving outlook and risks,” Powell said. “Based on this assessment, we will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data.” Interest rates are now high enough to be “restrictive,” meaning they are weighing on growth and inflation. Real interest rates “are now positive and well above mainstream estimates of the neutral policy rate, Powell said, adding “we cannot identify with certainty the neutral rate of interest.”
- Job Data: the US Personal Consumption Expenditure (PCE) price index remained sticky in July. The monthly headline and core PCE grew at a stable pace of 0.2%. Also, the annual headline and core PCE accelerated marginally to 3.3% and 4.2% as expected by market participants. For the week ending August 25, individuals claiming jobless benefits dropped to 228K vs. expectations of 235K and the former reading of 232K. After fewer job vacancies, US ADP Employment Change data showed the effects of higher interest rates. The ADP report for August showed the US private sector added 177K employees, lower than expectations of 195K and less than half of the upwardly revised July’s reading of 371K. The slowdown in job growth majorly came from the leisure and hospitality sector. Job creation by hotels, restaurants, and other employers in the sector fell by 30K in August after months of strong hiring. Wage growth also slowed in August. Job stayers saw an annual pay growth of 5.9%, while job changers’ pay growth slowed to 9.5%. US housing demand remains under pressure as higher mortgage rates are increasing again. Still, the worst of the housing sector correction appears to have passed due to tight supply.
UPCOMING IMPORTANT INTEREST RATE EVENTS IN SEPTEMBER:
- ECB – 14th September 2023
- PBOC – 20th September 2023
- FOMC – 20TH September 2023
- BOJ – 22ND September 2023
Figure 1: XAUUSD Co-relations | August-September 2023 | Piyush Ratnu Market Research How to trade Spot Gold: XAUUSD on NFP data today?
XAUUSD Bearish Scenario: $1907/1888/1866/1836?
If the bearish momentum extends, Spot Gold price may fall further towards $1907/1888/1866/1836 price trap zone as next stops, if Gold crash halts at $1866 or $1836 zones a reversal can be expected with a RT V 23.6 M15 M30 RT before/in next 12 trading days.
XAUUSD Bullish Scenario: 1985/2020/2048/2069?
If the Bullish momentum pushes Gold price across $1977 barrier, $1985, $2007 – $2020 followed by $2048 & $2069 zone can be the next target for Gold, opening way to $2096/2121 zone as an ideal sell entry. An unexpected BLACK SWAN event / geo-political tension based upward price movement in Spot Gold cannot be ruled out. It will be wise to avoid price trap zones.
Heading into the NFP show today, Spot Gold price is under a price trap of $1947 zone, as investors/traders are reluctant to place bets before NFP data is released. In current scenario, & as per past data fundamentals-based co-relations have guided us in a more accurate manner than technical co-relations, however I prefer to compare and match both for a better accuracy. The US NFP will emerge as one of the main market driver for Gold price.
BUY/SELL STOPS |WEEKLY B/S LIMITS: TARGET RT 23.6 TF M30/H1 | NAP $5/set:
S2 ZONE 1888 | DOWN TREND (Below $1907) : 1900/1888/1866/1836 | BUY LIMITS
R2 ZONE 1966| UP TREND (Above $1977) : 1985/2020/2048/2069 | SELL LIMITSTechnical Analysis | XAUUSD CMP $1939 | Gold Price – SR (D1) (MN) Levels to watch:
SR ZONES D1 R1 1941 R2 1947 R3 1952 R4 1955 R5 1961 S1 1938 S2 1932 S3 1927 S4 1924 S5 1918 SR ZONES MN R1 1949 R2 1980 R3 2011 R4 2030 R5 2061 S1 1930 S2 1899 S3 1868 S4 1849 S5 1818 01.09.2023 | XAUUSD: Monthly Price Projection and Trading Scenario by Piyush Ratnu
Figure 2: Trading Scenarios: SR-W1 PRSDBS MTD FIB RT TF H4 | Price Projection by Piyush Ratnu PROJECTED TRADING SCENARIO:
- Observe price at US OPENING D1 SS1 and then US SS2
- Observe D1 PRSRLVL set +3/6/9/12 for M15/30.236RT
- Do not enter between the pivot zone D1: S/R zones
- Observe D1SR: FIB 23.6% on M5 and M15/M39 TF for NAP target price based exit in buy or sell entry after 20/40/60/90 minutes of NFP and $25/40 price movement sets
- Movement of $30/45 dollars on Gold price is not something unexpected nowadays, and a surprise on Monday during early trading hours cannot be ruled out too, so closing all positions today in net average profit is always the best trading strategy for every trader who wants to safeguard his principal.
I expect A pattern on M30, H1 and H4 TF chart in sequence in next 7 trading days (short term target) and 21 trading days (long term target). XAUUSD CMP $1939. I will prefer to BUY lows near SR zone mentioned in the above analysis.
Point to be noted: let us not forget ongoing geo-political tensions which can trigger an upward price rally of more than $150/200 in Spot Gold price. Another catalyst of low volumes might step in too during Monday early morning opening.
Terms: TF: Time Frame | RT: Retracement | SR: Support Resistance | NAP: Net Average ProfitIt is always wise to first PLAN THE TRADE, and then TRADE THE PLAN!
Hence, it is suggested to first observe the crash or rise with specific zones and levels in mind on the basis of various fundamental and technical parameters mentioned above, before entering a trade in a specific direction with a target of net average profit in a specific set of trades.
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