Market Analysis: ISM Manufacturing as the starting point for a volatile week for Gold?

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  • 04.12.2018
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Market Analysis - A Volatile Week For Gold?

After the comments from FED chairman Jay Powell last Wednesday, where he stated that there is no pre-set policy path for the FED, and that rates are currently “just below” the neutral range, Gold saw a strong push on the upside. The reason for that: on 4th October, 2018, shortly before US equity markets sold off, and yields of 10-year US-T-Notes hit their highest level since 2011, Powell said that the rates are “a long way below neutral”, suggesting that the FED somehow has plenty of room for further hikes in 2019.

Forex Calendar - Economic Announcements

Source: Economic Events 03 December 2018 – Admiral Markets’ Forex Calendar

As it seems, a restrictive monetary policy path from the FED is now very dependent on economic data coming from the US, and will be closely monitored. In this context, today is the starting point for a very juicy economic calendar, with the ISM Manufacturing PMI, followed by the Non-Manufacturing ISM, and the ADP on Wednesday, then hitting its climax on Friday with the Non-Farm Payrolls. In regards to Gold, the framework seems simple: any disappointing data set will most likely result in USD weakness, thereby pushing Gold higher.

Gold 4 Hourly Chart

Source: Admiral Markets MT5 with MT5SE Add-on Gold 4-Hour chart (between 01 October 2018 to 30 November 2018). Accessed: 30 November 2018 at 11:00 PM GMT – Please Note: Forecasts such as this are not a reliable indicator of future results, or future performance.

So, a reading which comes in below expectation, and probably at its lowest level since July 2017, could result in a significant attack and break of the pre-weekly highs around 1,229.50 USD/ounce, making a run up to 1,244 USD (October highs) in the upcoming days very likely. But even if we don’t get to see such a run higher today: as long as Gold trades above its pre-weekly lows around 1,211 USD, the short-term outlook remains positive, and a positive year-end-close for Gold is very likely.

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