The High-Risk Aversion Caused Gold Reach the Highest Record, But the NFP Data and the Unemployment Rate Will Put Pressure to Gold
Independent Analyst: Zhen QuanXi
After the Asia Market opened on Monday (August 3), the gold market jumped. Gold price climbed more than $10, and exceeded $1,985/oz.
Weakening USD and the tensions between China and the US are still the main forces that drive the rise in gold prices. After the opening of the spot gold at Asia Market, the strong trend still continued since last Friday, reaching at the highest point at $1,986.94/oz. The gold price rose significantly last Friday. This is due to the declining USD and poor economic data from various places which triggered investors to buy gold as a safe haven. Gold price closed at $1,975.00/oz that day.
As a safe-haven asset, gold rose 30% this year. Gold is driven by low global interest rates and extensive stimulus measures launched by central banks. Gold is regarded as a safe haven asset against inflation and currency devaluation.
US Secretary of State - Pompeo urged Hong Kong on Sunday (August 2) to revoke the decision to suspend the election of the Legislative Council for one year. This is due to the Covid-19 spread which is getting serious again, saying that this would be another blow to Hong Kong’s autonomy.
In a statement issued on Sunday morning, Pompeo condemned the decision of Hong Kong Chief Executive - Carrie Lam to use emergency powers to postpone the Legislative Council elections that was originally scheduled for September 6 until September 5, 2021 next year.
US has always been particularly outspoken in opposition to Hong Kong government and China’s efforts to suppress protests in Hong Kong. This protest demanded that Hong Kong conduct free and open elections and obtain greater autonomy from China.
As China and US relations have fallen to the lowest level in decades, US has taken action to end the preferential treatment of Hong Kong because it believes that such treatment erodes Hong Kong’s autonomy and freedom.
China has repeatedly criticized US, especially Pompeo. China believes that US is trying to undermine its sovereignty over Hong Kong and interfere in its internal affairs.
U.S. Secretary of State Pompeo said on Sunday (August 2) that President Trump will decline in the coming days, the new actions against Chinese software companies which is considered to be a national security threat by the US government. Pompeo stated that the ‘TikTok’ and China’s social media app Wechat app provide data directly to the Chinese Communist Party. U.S. Treasury Minister - Mnuchin mentioned on Sunday that “We will not let TikTok remain in its current situation”.
The incidents above lead directly to the new highest level for gold price on Monday. People are suggested to aware with those ‘folks’ who are pushing the gold price with this information. This information helps them establish short (sell) orders at high level. Their purpose is to take advantage of the Non-Farm Payrolls and unemployment rate data to suppress the gold price.
People are kindly reminded that if the US-China relationship does not deteriorate further, the gold price would already be seriously overbought. Only if the Non-Farm Payrolls and the unemployment rate this Friday are significantly worse than the previous data, the gold price will be induced to hit the $2,000/oz psychological barrier.
Please be aware for the gold price development. First strong resistance will be at $1,988 and the second strong resistance $1,996. Focusing on the market outlook, each weak rising wave is an excellent selling opportunity.
After the profit is made, set the stop loss to protect the balance and track for greater profits.
For short (sell) orders that is done before reaching $1,988 or $1,996, it is recommended to hold positions until Friday, until the announcement of the Non-Farm Payrolls. Once the data is ideal, the sharp decline of gold price is expected to happen. If it is not ideal, you can also quickly close position to lock profits.
Non-farm Payrolls first goal ($1,953), second goal ($1,948), third goal ($1,943).
This article also covered in the Guo Ji Ri Bao newspaper issued on August 4, 2020.