The price of Gold surged today to more than $1125 following the release of China’s manufacturing activity report which spurred safe-haven investment sentiment among investors. The technical bias however still remain bearish because of a Lower Low and Lower High in the previous wave.
Earlier on Tuesday the bright metal sunk for a second day in-a-row with spot down to a daily low of $1121.31 a troy ounce, nearing pre-FED levels of $1,120.00 an ounce. Gold prices edged lower on the back of a strong greenback, and raising speculation that the Federal Reserve won’t wait long to finally raise its rates.
The commodity bounced back towards the 1,125.50 during Wednesday Asian session, but the overall technical tone is bearish as the price extended further below a bearish 100 SMA, whilst the technical indicators head lower, and are about to confirm a bearish continuation by crossing their mid-lines towards the downside.
In the 4 hours chart, the price is now well below its 20 SMA that gains a limited bearish slope, whilst the technical indicators are aiming to resume their declines after some consolidation, well into negative territory, supporting a downward continuation towards the critical static support at 1,109.20, on a break below the mentioned daily low.
The preliminary Caixin China manufacturing purchasing managers’ index (PMI) fell to a six-and-a-half-year low of 47.0 in September, below the 47.5 forecast in a Reuters poll. This compares with a final reading of 47.3 in August, the lowest since March 2009. A print above 50 indicates an expansion in activity while one below points to a contraction. The closely-watched gauge of nationwide manufacturing activity focuses on smaller and medium-sized companies, filling a niche that isn’t covered by the official data.