Has the Trend Shifted for Gold?

Gold had been displaying a bearish sentiment since early May after a retrace higher which ended with a lower high. the decline resumed by the middle of July, evident from its sequence of forming lower highs which lasted until last week. However, it appears that there might be a trend reversal underway since last week, as we’re seeing a change in sentiment as the recent lows are exhibiting an upward trend. The persistent selling pressure managed to push the price below the significant threshold of $1,900.

Nonetheless, a noteworthy shift occurred due to an increase in uncertainty in the lead-up to two significant summits that transpired last week. This shift in market sentiment served as a catalyst for a reversal in the price action, which seems to be trending upward now. Jerome Powell mentioned the economic data in relation to further rate hikes, but the data so far this week has been quite soft from the US, which has been keeping the USD down and other assets moving higher.

Buyers entered the market, resulting in a surge in the price above the moving averages, which have now evolved into supportive indicators on the H1 chart above. The 200 SMA (purple) took up that role initially, leading to a rebound observed after the price approached the $1,900 zone, which shows that there is buying pressure at that big level now.

This week the 100 SMA (green) came into play, with a bounce after the soft JOLTS job openings on Tuesday, which gave the USD another kick lower. Yesterday we had another round of soft data from the US, with another jobs report disappointing. The release of the ADP employment figures showed a decent slowdown from last month, indicating that the labour market is cooling off, while the Q2GDP figure was revised down to 2.1% from2.4% previously.As a result, Gold bounced off the 20 SMA (gray) which shows that the uptrend is picking up pace. So we decided to buy the retrace in Gold today.

GOLD