Daily Analysis XAUUSD - 31 Aug 2023

The US Dollar (USD) is hovering near a recent two-week low, prompted by disappointing US macro data released on Wednesday. This has become a driving force behind the rise in gold prices. Automatic Data Processing (ADP) revealed that US private sector employment only increased by 177K jobs in August, significantly lower than the revised 324K from the previous month and falling short of the 195K anticipated.

Additionally, the second estimate indicated that the US economy grew at an annualized pace of 2.1% in Q2, down from the initially reported 2.4% growth. The decline in the Consumer Confidence Index from 114.0 to 106.1 in August underscores expectations that the Federal Reserve (Fed) will halt its rate hikes in September. This is causing pressure on US Treasury bond yields, weakening the USD and benefiting gold.

Concerns about a global economic downturn also contribute to the appeal of gold as a safe-haven asset. However, a positive market sentiment might temper further gold gains. Traders are likely to wait for the release of the US PCE Price Index, a crucial inflation measure for the Fed, which could influence expectations about the Fed's rate decisions. Currently, markets are anticipating a 25 basis points increase by the US central bank in 2023. Given this context, unless positive inflation data emerges, the outlook supports upward movement for XAU/USD.

The bullish momentum in gold continues, pushing the price towards a new high at the 1950 level. The pair is currently awaiting more data to confirm the ongoing bullish trend. The next target is set at 1965, while the support level remains at the 1935 level.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1940	1920	1942	1900	1875	1845