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Gold Price XAU/USD Prepares for Key Events in the Upcoming Week

Gold Price XAU/USD Prepares for Key Events in the Upcoming Week

Last week, markets switched from risk-off to a weak risk-on mode. Here are the coming events that may affect market sentiment.

Key Data Releases in the Week ahead

On Monday, October 12, trades will tune in the ECB president Lagarde’s speech and her deputy’s Mr. Guindos.

On Tuesday, October 13, investors will find out about the final read of Germany’s inflation numbers of September, the UK unemployment figures of August, the Eurozone ZEW index of October, and the US inflation print of September.

On Wednesday, October 14, markets will follow the ECB president Lagarde’s speech with Fed members Clarida and Quarles will speak, respectively.

On Thursday, October 15, eyes will be on Australian unemployment numbers of September, Chinese inflation rates, US initial jobless claims, and changes in oil inventories. Later, the Fed member Quarles's speech, and the ECB president Lagarde’s speech.

On Friday, October 16, markets will know about the Eurozone inflation read of September, the US retail sales and industrial production reads of September, and the US Michigan sentiment index.

It is worth noting that, the European Council meeting will take place on October 15-16. Topics like Coronavirus updates and the EU/UK negotiations would be on the meeting schedule. The UK urged business to prepare for the end of the Brexit transition saying they needed to act whether there was a trade deal or not. Both sides stated that they were making a progress towards a deal.

Last week, the market recovered risk-on mode on news of resuming talks about the US fiscal package. The US administration rose its offer from $1.6 to $1.8 trillion. However, both Democrats and Republicans criticized it hinting that a deal before the US elections would be unlikely.

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Gold Daily Price Chart (June 5 – October 10, 2020 )

Chart Source: Webtrader, Capex.com

On September 28, Gold reversed course reflecting a weaker bearish sentiment. Last week, the price corrected its bearish trend and created a higher low at $1,872, then climbed to a higher $1,921- $2,015 trading zone.

A daily close above the 50-day average could rally the market further towards the high end of the current trading zone at $2,015. While a daily close below the low end of the current trading zone ie, below $1921, may encourage bears to press XAU/USD towards the weekly support at $1,861.

Gold Four Hour Price Chart ( August 18 - October 10, 2020 )

Chart Source: Webtrader, Capex.com

On Friday, XAU/USD traded above the bearish trendline resistance originated from the August 18 high at $2,015 highlighting the bull’s intentions to rally the price further.

To conclude, the price would stay in a sideways move until overtakes the September 16 high at $1,973. Therefore, a break above $1,941 may trigger a rally towards $1,973, while a break below the $1,900 threshold could reverse the price’s direction towards the low end of the current trading zone discussed above on the daily chart. As such, the support and resistance levels underlined on the chart should be kept in focus.

This information/research prepared by Mahmoud Alkudsi does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk. The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities). The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest. The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.