Gold strengthens over global growth anxieties

DISAPPOINTING US economic data released on Sept 19 has bolstered safe haven appeal as investors remain cautious over global recessionary fears. Persistent weakness in business investment and export figures have led to downbeat assessments for US GDP growth in Q3.

A weaker global backdrop, along with geopolitical uncertainties (Brexit, US-China, etc), will as such limit upside gains for global risk appetites whilst granting support for safe haven assets. Monetary policy loosening by central banks over a synchronised slowdown in global economic conditions will keep bullion appeal positive for Q4 2019.

What should investors look out for in the longer term?

Fed policymakers are widely expected to cut US interest rates by 25bps at the Federal Open Market Committee meet next week from Oct 29- 30. The US economy, though showing strength in its labour market, has however experienced considerable headwinds in business investments and manufacturing activities. Forward guidance by the Fed on the size and pace of additional rate cuts will be of key focus as FOMC officials seek to sustain economic growth.

Looming economic uncertainties and heightened geopolitical tensions will likely prompt dovish measures by the US central bank and stay supportive towards gold prices for the current term.

Technical Analysis for Spot Gold (XAUUSD)

Gold prices strengthened for the second consecutive week as market bulls breached key technical levels of US$1,492.00 and US$1,500.00. Gold bulls must break above US$1,510.00 and US$1,520.00 by extension for a resumption of the main bullish trend. Failure to consolidate bullish gains above the key psychological level of US$1,500.00 will trigger a bearish reversion in gold prices towards key trend line support of US$1,492.00 and US$1,480.00 in the near term.

Weekly Market Assessment: Mildly Bullish Key Resistance Level (1): US$1,525.00 Key Resistance Level (2): US$1,510.00 Key Support Level (1): US$1,500.00 Key Support Level (2): US$1,492.00