Gold Prices Try to End Downtrend on Decade Low ISM Print
Gold prices are up sharply on the heels of the US ISM Manufacturing index declining to its worst level in a decade. Gold prices (XAUUSD) are now up by 0.29% on the day, but it will not be easy for bullish traders to overcome the downtrend. Yesterday, Gold prices triggered a large head and shoulders pattern that has been forming since August and is suggesting that the price might decline to $1415 in the next few weeks. Today’s bounce is from a technical point of view just a correction against the downtrend, and as long as the price trades below the September 30 high of 1502 the downtrend will be intact. For more on the head and shoulders, see Gold Prices Could Slide to $1415 per H&S Pattern, XAUUSD.
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[vc_single_image image=”14654″ img_size=”medium” alignment=”center” style=”vc_box_rounded” onclick=”custom_link” img_link_target=”_blank” link=”https://www.investingcube.com/q4-global-market-outlook-eurusd-gold-crude-oil-bitcoin-sp-500/”]As for the ISM reading, the index declined to 47.8 from 49.1 and much lower than the 50.1 anticipated by economists. New orders, production, and employment sub-indices have contracted in September, and suggest a lower reading in the months ahead. In particular, New export orders have contracted sharply as overseas demand for US products has declined.
Today’s contraction was faster than the once witness in August, and it is the second time in 2019 that the index is below the 50-threshold level, suggesting that the manufacturing sector is contracting. The ISM institute, reports back that global trade issues remain the most crucial problem of the US manufacturing sector. Given the past correlation between the US economy and the ISM index, it suggests that the US economy is growing by 1.5% annualized.