Gold prices extended their sharp rally and the breakout above the psychological $1,500 mark has further enhanced bullish sentiment. Economic data out of Asia offered more recession signals for the global economy. The New Zealand Business Manufacturing PMI slid into contractionary territory below 50 with a downward revision to the previous month. While the Singapore trade surplus for July came in higher than expected, on an annualized basis it is contracting with non-oil exports slumping. The Hong Kong riots are also darkening the overall economic outlook for Asian economies. Will gold be able to extend its rally? This morning’s fundamental analysis will take a look at the next resistance level for this precious metal as well as the downside risk for a potential short-term sell-off due to profit taking.
Trade data out of the Eurozone will be next for forex traders and economists expect the surplus to shrink as global trade is slowing. The US inverted yield curve is flashing a recession signal for the US with German banks amongst the Eurozone weakest financial institutions. Housing data out of the US is anticipated to show a recovery after an overall weak year, but consumers extended their purchases as indicated by yesterday’s retail sales data. Consumer confidence data will offer the final economic data point for this trading week. How will this impact price action in Gold? Subscribe to the PaxForex Daily Fundamental Analysis and join our fast growing community of profitable forex traders!
Here are the key factors to keep in mind today for Gold trades:
- New Zealand Business Manufacturing PMI: The New Zealand Business Manufacturing PMI for July was reported at 48.2. Forex traders can compare this to the New Zealand Business Manufacturing PMI for June which was reported at 51.1.
- Japanese Buying Foreign Bonds and Japanese Buying Foreign Stocks/Foreign Buying Japanese Bonds and Foreigners Buying Japanese Stocks: Japanese Buying Foreign Bonds for the period ending August 9th was reported at ¥173.1B and Japanese Buying Foreign Stocks was reported at ¥62.0B. Forex traders can compare this to Japanese Buying Foreign Bonds for the period ending August 2nd which was reported at ¥292.0B and to Japanese Buying Foreign Stocks which was reported at ¥95.3B. Foreign Buying Japanese Bonds for the period ending August 9th was reported at ¥545.5B and Foreigners Buying Japanese Stocks was reported at -¥187.0B. Forex traders can compare this to Foreign Buying Japanese Bonds for the period ending August 2nd which was reported at ¥179.9B and to Foreigners Buying Japanese Stocks which was reported at -¥339.9B.
- Singapore Trade Balance: The Singapore Trade Balance for July was reported at $2.830B. Forex traders can compare this to the Singapore Balance for June which was reported at $2.450B. Non-Oil Exports for July increased by 3.7% monthly and decreased by 11.2% annualized. Economists predicted an increase of 2.7% and a decrease of 15.2%. Forex traders can compare this to Non-Oil Exports for June which decreased by 7.8% monthly and by 17.4% annualized.
- New Zealand Non Resident Bond Holdings: New Zealand Non Resident Bond Holdings for July were reported at 51.7%. Forex traders can compare this to New Zealand Non Resident Bond Holdings for June which were reported at 50.3%.
- Eurozone Trade Balance: The Eurozone Trade Balance for June is predicted at €16.3B. Forex traders can compare this to the Eurozone Trade Balance for May which was reported at €23.0B.
- US Housing Starts and Building Permits: US Housing Starts for July are predicted to increase by 0.2% monthly at 1,255K starts and Building Permits are predicted to increase by 3.1% monthly to 1,270K permits. Forex traders can compare this to US Housing Starts for June which decreased by 0.9% monthly to 1,253K starts and to Building Permits which decreased by 6.1% monthly to 1,220K permits.
- US Michigan Consumer Sentiment: Preliminary US Michigan Consumer Sentiment for August is predicted at 97.2. Forex traders can compare this to US Michigan Consumer Confidence for July which was reported at 98.4. Preliminary Current Conditions for August are expected at 110.4 and Preliminary Expectations are predicted at 89.0. Forex traders can compare this to Current Conditions for July which were reported at 110.7 and to Expectations which were reported at 90.5.
Should price action for Gold remain inside the or breakout above the 1,507.85 to 1,527.65 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,516.50
- Take Profit Zone: 1,590.10 – 1,619.85
- Stop Loss Level: 1,500.85
Should price action for Gold breakdown below 1,507.85 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1,494.00
- Take Profit Zone: 1,457.70 – 1,472.00
- Stop Loss Level: 1,507.85
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