KVB Market Analysis | 3 September: Gold Prices Fall Ahead of Key U.S. Economic Data Release

Product: XAU/USD

Prediction: Increase

Fundamental Analysis:

In the early Asian session, spot gold continued to fall and is now around $2,496 per ounce. Today, investors are focused on the first major data release of the week, the U.S. ISM Manufacturing PMI, which is expected to cause significant movement in the gold market. This week will be busy with U.S. economic data, including the ISM Manufacturing and Services PMIs, JOLTS job openings, ADP employment changes, and non-farm payroll data. The U.S. ISM Manufacturing PMI for August is expected to be released, with investors predicting an increase from 46.8 in July to 47.8. If the PMI is above 50, it indicates that manufacturing activity is expanding, which could strengthen the U.S. dollar and put pressure on gold.

Technical Analysis:

The momentum has turned negative, as shown by the Relative Strength Index (RSI). The RSI is sloping down and is close to a neutral level. This suggests that in the short term, gold prices are likely to move downwards. If the price stays below $2500, the next support level will be the August 22 low of $2470. If it breaks below this level, the next target for gold will be around $2424-$2431, where the August 15 low and the 50-day Simple Moving Average (SMA) converge. However, if gold prices bounce back and break above $2500, the next resistance level will be the all-time high of $2531. Beyond this, the next resistance will be $2550, and if this is overcome, gold may aim for $2600.

Product: USD/JPY

Prediction: Increase

Fundamental Analysis:

Last week's data increased the chances that the Bank of Japan (BoJ) might raise interest rates in the coming months. This would likely strengthen the Japanese Yen by attracting more foreign investment. In July, Tokyo's annual inflation rate, excluding fresh food, was 2.4%, up from 2.2% the previous month and higher than the expected 2.2%, according to the Statistics Bureau of Japan. This suggests that inflation across Japan might also rise. However, Japan's employment data was weaker, with the unemployment rate unexpectedly rising to 2.7% in July from 2.5% in June.

Technical Analysis:

On the weekly chart, USD/JPY is trading sideways, staying within the $140.78-$147.30 range. For buyers to continue the uptrend, they need to push the price above the recent high of $149.39. Sellers, on the other hand, need to break through $141.69 before targeting $140.78. On the daily chart, buyers are starting to regain control and could aim for $148.46, but first, they need to overcome key resistance levels—first at $147.00, then at $148.00. If sellers take over and bring the price down to $146.90, it could lead to further declines. The next support levels would be at $146.00 and then $145.00.

Product: EUR/USD

Prediction: Increase

Fundamental Analysis:

On Monday, EUR/USD found some support around $1.1050 as it started the new trading week, trying to hold onto recent gains. Trading volume was light, with US markets closed for the Labor Day holiday. The US markets will reopen on Tuesday, just in time for a busy week full of important US labour data. Later in the week, on Thursday and Friday, the EU will release Retail Sales and GDP growth figures. However, the main focus will be on US labour data, starting with the JOLTS Job Openings report for July, expected to remain steady at 8.1 million.

Technical Analysis:

On Monday, EUR/USD managed to gain slightly, rising from the $1.1050 level after three days of declines. Last week, the pair reached a 13-month high, just above $1.1200, but a recent pullback in the US Dollar has traders trying to maintain a positive outlook. The pair is still trading well above the 200-day Exponential Moving Average (EMA) at $1.0845. However, despite being in a strong bullish position, EUR/USD is facing increasing downward pressure as sellers target the area just above the 50-day EMA at $1.0956.

Product: BTC/USD

Prediction: Decrease

Fundamental Analysis:

Bitcoin might face pressure in the short term because September has historically been a weak month for Bitcoin, with an average return of -4.45%. However, many market participants are looking ahead, expecting a strong performance in October, which has an average return of 22.90%, according to CoinGlass data. Bitcoin miners in the US and worldwide are facing challenges. In August, total Bitcoin mining revenue dropped to $8.5136 billion, the lowest this year, a decrease of $99.75 million compared to July, highlighting the increasing pressure on miners, according to The Block. Analysts warn that $56,000 is the last line of defence for miners, with Bitcoin prices hitting a low of $57,128 on Monday.

Technical Analysis:

Over the weekend, Bitcoin fell below the immediate support level of $58,000, but sellers couldn't push the price down to the key level of $55,724, indicating that demand is stronger at lower levels. Buyers will now try to push the price above the moving averages. If they succeed, Bitcoin could rise to $65,000. However, this level is expected to be a tough barrier in the short term, which might keep Bitcoin trading within a wide range of $55,724 to $73,777 in the coming days. On the other hand, if the price drops below the 20-day moving average at $60,007, sellers will likely try again to bring the price down below $55,724. If they succeed, the pair could fall to the August 5 intraday low of $49,000.

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