Gold August 2:5: buying above $1690

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Gold August 2:5: buying above $1690

Early in the European session, gold is trading roughly at 1,697. We can see Murray's 2/8 area as a strong support for gold. If the asset manages to consolidate above this level, we can expect an upward acceleration towards the top of the downtrend channel that has been developing since August 22nd.

Gold fell yesterday in the US session to the lowest level at 1,688.65, due to the US initial claims for unemployment benefits, which reached the highest level since April. Another factor that could put pressure on gold is expectations that the Federal Reserve will raise interest rates by 0.75% at its next meeting in September.

In the event that gold breaks below 1,687, it may reach its lowest level in 2021 at around 1,675. Recovery above 1702 and consolidation above the downtrend channel should ease downside pressures. Gold is trading above 2/8 Murray (1,687) and below the 21 SMA located at 1,717. Gold is expected to trade within this range in the coming hours, pending US employment data.

Non-farm payrolls may lead to strong volatility in the market. Gold is expected to break through in the next few hours and consolidate above 3/8 Murray (1718). If the price of gold remains above this level, it could mean an acceleration to the upside and the metal could reach the top of the downtrend channel at around 1730 that has formed since early August.

Since August 22, the agula indicator is showing a slightly bullish signal and a positive divergence. If it consolidates above this level in the next few hours, it may continue to give gold a positive signal and the precious metal may reach the 200 EMA located at 1.755.

In the event that gold breaks and consolidates below 1.685, we should avoid buying as the bearish cycle is likely to resume again and the price may reach the psychological level of 1.650. On the other hand, as long as gold is trading above 2/8 Murray, it will be a buying opportunity with targets at 1,717, 1,735, and 4/8 Murray around 1,750.

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