Marketupdate | 06/09/2023

Gold falls to a 1-month low amid good trading volume as the USD hits a 6-month high

Indications only | Closing prices are bids | Prices & Charts  : Trading View | Market Research Refinitiv | See disclaimer below

Today’s Observations

Gold posted its high for the day of $1939 in early Asia trading on Tuesday and then worked its way steadily lower to reach $1930 in Europe before bouncing back to $1936 shortly after the New York opening following a weaker than expected US Factory Orders report. However, the yellow metal resumed the downtrend to end on the lows and down 0.62% at $1926 amid good volume, as the DXY hit a 6- month peak and US10YT yields rose to a 1-week high and has held narrowly between $1924 and $1927 so far this morning. The US economy will be in focus today with three important reports due to be released, while on the charts the close below the 50-day MA was technically negative with the 200-day MA set at $1918 the likely target. We expect a trading range of $1915 to $1935. Silver fell 1.88% to $23.54 as the industrial precious metal reacted to weak economic data from China and it looks technically vulnerable with the MACD poised to flag a sell signal that could target support pegged at $23. Platinum was also impacted by the negative news from China, falling 2.61% to end on the lows at $933, while palladium recovered from a decline to a near 5-year low of $1184 to end with a pared 0.49% loss at $1216.

Market Commentary

September 06, 2023 (Reuters) – Gold slipped to one-week lows on Wednesday, falling further after posting its biggest intra-day decline in a month in the last session, as U.S. Treasury yields and the dollar advanced on expectations that interest rates are likely to remain high. Spot gold was subdued at $1,924.41 per ounce by 0058 GMT, after posting its biggest one-day loss since Aug. 1 on Tuesday. U.S. gold futures fell 0.1% to $1,949.80. The U.S. dollar rose to a near six-month high against a basket of currencies in the last session, while benchmark 10-year bond yields reached their highest level in over a week, dampening appetite for bullion. Federal Reserve Governor Christopher Waller said the latest round of economic data was giving the U.S. central bank space to see if it needs to raise interest rates again. Higher U.S. interest rates and Treasury bond yields raise the opportunity cost of holding gold, which does not earn any interest. Global business activity largely slowed further last month as services firms struggled in the face of weak demand as rising prices and borrowing costs made indebted consumer rein in spending, a raft of surveys showed on Tuesday. China’s exports likely contracted at a slower pace in August, a Reuters poll showed, highlighting that manufacturers remain under pressure after outbound shipments recorded their worst performance since February 2020 last month. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.1%. Elsewhere, spot silver eased 0.1% to $23.49 per ounce, platinum dipped 0.3% to $923.34, and palladium was up 0.1% to $1,212.85.

Economic Analysis

New orders for manufactured goods in the US decreased by 2.1% from the previous month to $579.4 million in July of 2023, less than market expectations of a 2.5 percent fall and after four consecutive months of increases. It compared with an upwardly revised 2.3 percent rise in June. Demand for transportation equipment, also down following four consecutive monthly increases, drove the decrease, down by $16.5 billion or 14.3 percent to $98.6 billion, mainly due to nondefense aircraft and parts. Demand was also down for primary metals (-0.1 percent vs 0.1 percent in June) and computers and electronic products. On the other hand, demand for nondurable goods increased by $3.1 billion or 1.1 percent to $293.9 billion. source: U.S. Census Bureau

Gold Chart ($/oz)

Silver Chart ($/oz)

Platinum Chart ($/oz)

Palladium Chart ($/oz)

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