Trade Of The Day: US Manufacturing PMI Miss, Gold Soars

Fundamental Analysis: 

• Rate Cut Hopes Reignited: Gold price soared over $2060 after US ISM Manufacturing Purchasing Manager Index (PMI), which fell below expectations. This has reignited optimism among market participants regarding the possibility of the Federal Reserve (Fed) implementing rate cuts sooner rather than later. The U.S Manufacturing PMI declined to 47.8 versus the forecast of an increase to 49.5. 

Technical Analysis: 

• Technical Breakout: The yellow metal was traded higher and breaks above the previous resistance level 2066.00. MACD, which indicates ongoing bullish momentum coupled with bullish market structure suggests the commodity may extend its gains towards the next resistance level. 

• Resistance and Targets: Should the bullish momentum persist; the price would be heading towards the subsequent resistance level 2122.00. However, a retracement below the support level 2066.00 would signal potential reversal for the commodity. 

Learn more about Support and Resistance levels to help you in technical analysis.

Potential Risks:

Despite the recent data reigniting expectations for an earlier rate cut, the market remains cautious as Atlanta Fed President Raphael Bostic has conveyed a stance indicating the possibility that the Federal Reserve might need to maintain current interest rates for an extended period. This statement from President Bostic has introduced an element of caution and uncertainty within the market. 

Read what are some risk management strategies to help you manage potential trading risks.

Monitoring:

Stay updated on key data from U.S, global economic updates, and any shifts in the US Dollar’s strength following our daily financial news or market insights articles.

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