Gold Technical Analysis: Gold Price is Still Trying to Recover – 02 March 2023
For two days in a row, the price of XAU/USD gold tried to rebound to the upside and recover from the strong and sharp selling operations.These operations pushed it towards the support level at $1805 an ounce, its lowest in two months, but the attempts to rebound I see that it is still weak.It did not exceed the level of $1844 an ounce and settled around the level of $1835 an ounce.The weakness of the rebound in the first place amid the continued strength of the US dollar due to the expectations of raising interest rates by the US Federal Reserve Bank.
In general, the winds of hope in the month of March blow to the financial markets that the reopening of China will compensate for the weakness in other countries suffering from stubborn inflation and a worsening cost of living crisis. China’s huge economy is recovering from the pain of the pandemic, with the latest reading of the closely watched survey on factory activity showing better-than-expected growth in February.
According to the official announcement, the Caixin General Manufacturing PMI rose to a reading of 51.6, beating expectations of 50.2, up from a reading of 49.2 in January. A level above 50 indicates growth and this is the best result since May 2021 before the stressful effects of rolling lockdowns took effect, and the first jump in activity since July, with new orders coming in, staffing levels increasing and production picking up. Meanwhile, Hong Kong’s Hang Seng Index rose, on a wave of positivity with the outlook for next year being particularly well received, given optimism rising to a two-year high. The Covid crisis is quickly receding into the rearview mirror and the demand for raw materials to maintain factory lines is expected to be in rapid circulation.
At the same time, the price of Brent crude rose in the wake of the news that it is heading towards $ 84 a barrel, amid expectations of increasing industry thirst for energy in China. The British pound gave up much of its gains, which had been driven by new expectations that the Bank of England will continue to raise interest rates and possibly keep them higher for longer.
Supply concerns also persisted as Russia cut oil exports further. But concerns about a slowdown in the US are keeping a cap on prices for the time being, as concerns persist about the delayed impact of higher interest rates on the world’s largest economy. Over the course of the month, the benchmark index fell around 3%, highlighting the extent to which concerns about a global slowdown remain front and center despite a more positive picture regarding economic growth in China.
After a weak February, Wall Street appears to be starting the new month on another pessimistic note, with futures lower, as investors await the latest US PMI manufacturing and construction data. The preliminary reading for February continued to decline.
There will be a close rehearsal of any clues as to whether, in the final readings, the level of business activity proves more resilient and any change to the upside could add fresh concern about inflation which is proving very sticky. The UK housing market is back in sharp focus today as the Nationwide House Price Index fell for the sixth month in a row. Buyers are dominating the market at the moment. They know they have the upper hand, since public interest is so weak, so they’re clearly bullish about getting discounts from sellers.
There is some hope that lower deals now on the market, compared to the fall’s horrific mortgage mayhem may see demand increase, but it’s still too early to tell how far rates will fall.
There is no change in my technical view of the performance of the gold market. According to the performance on the daily timeframe chart, the general trend of the XAU/USD gold price is still bearish. We indicated in the recent technical analysis of the gold price that approaching the psychological support level of $1800 will deepen the movement of the technical indicators towards oversold levels. It can be expected to think about buying while not taking risks from support levels at 1800 and 1785 dollars an ounce, respectively. From the last level, it is better to start thinking about buying gold.
The resistance stations at 1845 and 1872 dollars, respectively, will be the most important for an exit from the current bearish channel. The price of gold today will be affected by the level of the US dollar, in response to the number of weekly US jobless claims and statements by some US monetary policy officials, as well as the extent to which investors are willing to take risks or not.
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