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XAU/USD Overview & Technical Analysiss

Fundamental Summary

Based on the current summary of positive and negative influences affecting the XAU/USD, we believe that the gold price will keep its current price but with a substantial possibility of an increase. Therefore, our short-term fundamental for the XAU/USD pair is NEUTRAL.

Global and Key Economic Events

There is a psychological drive towards gold whenever the US dollar's value drops. The inverse relationship exists because other currencies rise when the value of the dollar declines. As a result, The demand for goods, including gold, rises. Also, when the value of the US dollar declines, many investors turn to gold as an alternative investment. However, it is important to note that a crisis in another country or region can cause both gold and the dollar to rise simultaneously.

Listed below are recent events that have occurred and are expected to affect the price of gold in the short-term:.

Positive US Building Permits fell to 1.517M

The number of building permits issued for new homes fell in August as higher building and borrowing costs reduced demand. Building permits decreased by -10% to 1.517M which was less than analysts had predicted. Building permits serve as an advanced indicator, whereas housing starts serve as a current indicator. Building permits indicate an upcoming economic surge or plunge because of their scale and nature. The rise in building permits can indicate an increase in employment, increased consumption of goods and services, flourishing businesses, and so on.

Negative US Retail Sales increased by 0.3 percent

On a month-over-month basis, Retail Sales increased by 0.3 percent, compared with analysts' consensus estimates of 0.2 percent. As well, the Core Retail Sales, which measures changes in retail sales excluding autos and gasoline, decreased by -0.3 percent. Retail sales are a strong indicator of the health of an economy and whether it is contracting or expanding.

Negative US Initial Jobless Claims decreased

The number of Americans filing for unemployment insurance unexpectedly decreased last week, according to Labor Department data. Seasonally adjusted initial jobless claims totaled 213K, declining from a revised figure of 218K in the previous period. Economists had expected a worse reading of 226K. The strength of the US economy influences how the USD trades against other major currencies. It has to do with the fact that strong economies are usually associated with higher interest rates, which makes a currency more attractive. Initial claims readings that are higher than expected are likely to be seen negatively for the USD, while readings that are lower than expected are likely to be viewed positively.

Positive Russia – Ukraine escalation

In a significant escalation of his failing invasion of Ukraine, Russian President Vladimir Putin declared a "partial mobilization" and called up 300,000 reservists. Putin also renewed his nuclear weapons warning as Russia tries to annex the area of occupied Ukraine

Positive The tensions between China and Taiwan

The number of buildinThe tensions between Taiwan and China have spiked following Nancy Pelosi's visit to Taipei. China staged war games near Taiwan to express its anger at what it saw as stepped-up U.S. support for the island Beijing views as sovereign Chinese territory. Because Taiwan produces the majority of the world's semiconductors, which are used in every electronic device today, a war between China and Taiwan might be catastrophic for the global economy.

Technical Analysis

When trying to optimize the timing of an investment, it's critical to analyze whether the pair looks overbought or oversold, and in which direction the momentum is moving. XAU/USD is now priced above its 5-day, but below its 50-day 200-day moving average, while its MACD (Moving Average Convergence Divergence) indicates that the pair's price movement momentum is weakening. Historically, this is a positive setup in both the short and medium-term. Meanwhile, looking at the Stochastic Oscillator and RSI (Relative Strength Index), XAU/USD doesn't strongly signal to be overbought or oversold. Overall, these technical indicators signal negative momentum. Therefore, this pair received a cumulative TA (Technical Analysis) score of 57.

Neutral 57
Close Price 1664.81
52W Low 1653.85
52W High 2070.29
5D MA 1670.01
50D MA 1633.00
200D MA 1830.24
MACD -17.74
RSI 36.94
STOCH 25.10

This report, prepared and provided by Deshe Labs Ltd ("Deshe"), is intended for general guidance and information purposes only and under no circumstances is tailored to a specific factor or variable related to its reader or intended to be used, construed, or considered as financial or investment advice, an offer, a solicitation of any offer, a recommendation, or an offer to invest in, sell or buy the securities mentioned in this report or other form of a financial asset or as a marketing communication under FCA Rules. For the full disclaimer, click here.