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Gold Price Signals Bearish Breakdown, PMI’s Next

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Aayush Jindal

Key Highlights

  • Gold price is moving lower below the $1,900 zone.
  • A major bearish trend line is forming with resistance near $1,900 on the 4-hour chart.
  • Crude oil prices corrected gains and traded below $82.00.
  • The US Manufacturing PMI could rise from 49 to 49.3 in August 2023 (Preliminary).

Gold Price Technical Analysis

Gold price struggled to stay above $1,950 and started a fresh decline against the US Dollar. The price traded below the $1,932 support to move into a bearish zone.

The 4-hour chart of XAU/USD indicates that the price settled below $1,920, the 100 Simple Moving Average (red, 4 hours), and the 200 Simple Moving Average (green, 4 hours).

The price even declined below the $1,900 level and tested the $1,885 zone. A low is formed near $1,884 and the price is now consolidating losses. Immediate resistance is near the $1,900 zone. There is also a major bearish trend line forming with resistance near $1,900 on the same chart.

The trend line is just below the 23.6% Fib retracement level of the downward move from the $1,982 swing high to the $1,884 low.

The next major resistance is near the $1,920 level or the 100 Simple Moving Average (red, 4 hours), above which the price could test the 50% Fib retracement level of the downward move from the $1,982 swing high to the $1,884 low.

Conversely, the price might decline further. Initial support is near the $1,884 level. The next major support is near $1,875.

If the bulls fail to protect the $1,875 support, there is a risk of a major decline. In the stated case, the price could decline toward the $1,860 level.

Looking at crude oil prices, there was a downside correction below the $82.00 support and there is a risk of more downsides.

Economic Releases to Watch Today

  • Germany’s Manufacturing PMI for August 2023 (Preliminary) - Forecast 38.7, versus 38.8 previous.
  • Germany’s Services PMI for August 2023 (Preliminary) - Forecast 51.5, versus 52.3 previous.
  • Euro Zone Manufacturing PMI for August 2023 (Preliminary) – Forecast 42.6, versus 42.7 previous.
  • Euro Zone Services PMI for August 2023 (Preliminary) – Forecast 50.5, versus 50.9 previous.
  • UK Manufacturing PMI for August 2023 (Preliminary) – Forecast 45.0, versus 45.3 previous.
  • UK Services PMI for August 2023 (Preliminary) – Forecast 50.8, versus 51.5 previous.
  • US Manufacturing PMI for August 2023 (Preliminary) – Forecast 49.3, versus 49.0 previous.
  • US Services PMI for August 2023 (Preliminary) – Forecast 52.2, versus 52.3 previous.
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