Gold Price at Critical Juncture as ISM Non-Manufacturing PMI Looms
The US ISM Non-Manufacturing PMI came in at 52.6, lower than the consensus figure and enough to spur some gold price uptick. This result marks a continuation of a poor week fundamentally speaking for US economic indicators.
Risk-off sentiment pervaded the financial markets yesterday and gold price benefitted, but not by much. Gold gained $31 yersterday, as traders bought into the safe-haven asset cautiously. It has added to these gains today and is now trading around 1510.80.
Gold prices seemed to be forming a head and shoulders pattern, but the price action of yesterday and today have distorted the pattern slightly. However, the pattern has not been fully negated. There is a still a chance the pattern will play out if tomorrow’s news trade aligns with the pattern.
Due to the disappointing ISM Non-manufacturing PMI figure, gold price continues to stay above the ascending trendline which connects price lows from July 2019 till date. This line was broken by Monday’s price action but the risk-off trades created a pullback scenario.
Price has now stalled at the point where the ascending trendline support-turned resistance line and the horizontal resistance at 1510.80 meet (August 7 high). If gold price can push above this level, 1554 (Aug 26, Sep 5 highs) will come into focus.
On the flip side, failure to breach this level will point price towards the neckline. If tomorrow’s Non-farm Payrolls report is bad for the USD, the neckline may give way and 1451 (July 9 high in role reversal) could be on the cards.