Soft US data bullish for XAUUSD
Manufacturing and sales data indicated US economy cooled since last Fed meeting. Will the XAUUSD continue advancing?
The US-China trade dispute remains the main drag on global economy with the uncertainty driving the demand for haven assets including gold. Data after Fed’s October 30 interest rate cut point to cooling of US economy: the manufacturing sector continued contraction in October albeit at slower pace as ISM Manufacturing Index edged up to 48.3 from 47.8 in September, though services sector expansion accelerated. Retail sales growth slowed to 3.1% over year in October from 4.1% in September, and industrial production decline accelerated to 1.1% from 0.1% in September. And trade talks have hit a snag after reports Monday Beijing is pessimistic about trade deal following President Trump’s denial of agreeing about tariff rollback which China thought sides had agreed in principle. Next day US Senate approved a bill to support human rights in Hong Kong. China promptly threatened “strong countermeasures.” Soft economic data and continued trade uncertainty is bullish for gold prices.
On the daily timeframe the XAUUSD:D1 is rising to test 100-day moving average MA(100) which is rising.
- The Parabolic indicator has formed a buy signal.
- The Donchian channel indicates downward bias: it is narrowing down.
- The MACD indicator gives a bullish signal: it is below the signal line and the gap is narrowing.
- The RSI oscillator is level below 50 level.
We believe the bullish momentum will continue after the price breaches above the upper boundary of Donchian channel at 1478.30. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the last fractal low at 1456.22. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (1456.22) without reaching the order (1478.30), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.
Technical Analysis Summary
| Order | Buy |
| Buy stop | Above 1478.30 |
| Stop loss | Below 1456.22 |