Gold price has declined for two consecutive weeks after a regular two-week gain in the bullion market following the devaluation of the Chinese yuan on August 11.
The US dollar’s weakness came amid losses on major US, European and Asian equities markets as the murky US jobs data added to worries about China’s economic slowdown and financial turmoil.
The US August jobs report, the last monthly labour data before Fed policy makers meet on September 16 and 17, showed disappointing job growth but the previous two months’ gains were revised higher and the unemployment rate fell more than expected to 5.1%.
The commodity since the beginning of the year fell more than 5.5% and changed from a recovery to a bearish phase last week, trading below the 10 and 50-week moving averages. Last week gold tried to rallied but found enough selling pressure to reverse and closed in the red near the low of the week on a narrow range week, creating a 2nd inside week. Stochastic is showing a bullish momentum but is still below the 50 mid line.
Expecting an upward move to a key level at 1238.14 on a break above previous week high at 1,147.82 (scenario 1) or a break below the previous week low at 1,116.58 could push downward gold to a Year lows at 1,070.83 (scenario 2).