Weekly Gold Market Update: Bearish or Bullish?
Fundamental Analysis
Factor 1: President Donald Trump clarified on his social media that “Gold will not be tariffed!”, increasing the gold demand and resulting in a higher gold price for the initial reaction. However, the gold price slipped back once again as the market started to question whether this gold can still be called a safe-haven asset. The gold price dropped by roughly 0.50%.
Highlight: Normally, having the gold tariff lifted → Gold demand will likely to go up long term. Yet in this context, many still question gold’s credentials as the safe-haven asset → gold only bounced for the short term.
Factor 2: Ahead of the US-China Deadline today, another 90-day suspension of tariffs was signed once again by President Donald Trump early this morning, albeit some markets already anticipated this agreement. Not much reaction after release.
Highlight: Having an extension would mean more clarification for the market → gold should go down. But here, the market is anticipating the CPI tonight.
Factor 3: The US Consumer Price Index tonight will offer insight regards to inflation problem and how the Federal Reserve will take the next initiative step toward the interest rate decision.
Highlight:
- Hotter CPI → rising inflation problem → hawkish stance will likely come → gold price likely to go down.
- Cooler CPI → diminish some concern → the Federal Reserve will likely price in a September rate cut → could possibly boost the gold price.
Factor 4: A meeting between Russia and the US will be held this Friday in Alaska, where some sources cited that Russia seeks to acquire Ukrainian territory in exchange for peace. Yet, Ukrainian President Zelenskyy rejected this proposal, saying that “we won’t give up the land for peace,” although he expects that some agreement will be made.
However, Trump also mentioned that “there will be some swapping; there’ll be some changes in land,” hinting at the possibility of giving up territory in order to restore the peace.
In a pre-context, higher tariffs will be imposed on those who purchase Russian oil, such as India or China, so having a lesser tension between them or reducing the hostilities will likely favor these countries in return, albeit gold prices will likely slump.
However, if a ceasefire is not reached and tension increases → may possibly lead to higher gold prices.
Technical Analysis
Here is a scenario for the Gold price this August:
- Weekly Volume Profile: Price stays below the point of control, telling us the bias of the market is in a downtrend scenario.
- Premium Price is above 3383.
- Possible price projection is 3288.
