Gold commodity trading, which has remained on the decline since last week, is seen to have bounced back successfully after the release of the United States manufacturing and services (PMI) data which was dismal and stunted the previous strengthening momentum of the US dollar.
Examining the details of the data, the service sector contracted to a lower level in August than expected to a level of 44.1, while the manufacturing sector grew more slowly to a level of 51.3 recording the latest lowest level since July 2020.
The dollar index and 10-year US bond yields were also seen shrinking again after successfully peaking to higher levels at the beginning of the week which also supported the increase in the value of the yellow metal to take gains in yesterday's New York session.
Looking at the price movement on the XAU/USD chart that measures the value of gold against the US dollar on Tuesday's trade yesterday, the price initially moved horizontally in the 1740.00 zone with the Moving Average 50 (MA50) level becoming a resistance for price movement in the 1-hour time frame from the Asian session continue to the European session.
But a surprise after trading entered the New York session with a surge in gold prices after the market's reaction to the published US economic sector data.
The price has surged past the MA50 barrier level to reach a high of around 1754.00 before the price movement started to flatten and slow down towards the end of the New York session closing trading around 1747.00.
Continuing on this morning's Asian session, the price is still seen to maintain the horizontal movement, hovering above the MA50 support level which allows expectations for gold prices to continue rising higher.
If the increase succeeds in continuing, the initial resistance that needs to be broken by the price is at the SBR (support become resistance) zone of 1760.00 first before investors are more confident for a more bullish gold movement.
Once the rise continues, the price is expected to retest some previous concentration levels such as the 1772.00 and 1785.00 levels before returning to the resistance zone at 1800.00.
On the other hand, if yesterday's surge is just a temporary market reaction and prices start to shrink again, it is likely that the decline will cross the MA50 support level and test the 1740.00 zone again.
The continued decline could surpass the lowest level reached at the beginning of the week at 1728.00 with the next price target to head towards the 1720.00 level to test the support zone to record the latest low.
