Gold inched higher on Monday, increasing the price of the yellow metal to more than $1290.00 an ounce following some key economic releases. The technical bias remains bullish because of a higher high in the recent upside move.
XAU/USD Technical Analysis
As of this writing, the precious metal is being traded near $1291 an ounce. On the downside, a support may be noted around $1288, an immediate horizontal support ahead of $1280, the 50% fib level as well as another key horizontal support area and then $1200, a major psychological number.
On the upside, a hurdle can be noted near $1300, a key psychological level ahead of $1357, the high of the last major upside rally on daily chart and then $1400, the psychological level. A break and daily closing above the $1400 level shall trigger renewed buying interest, validating a rally towards the $1440 resistance zone. The technical bias shall remain bullish as long as the $1200 support area is intact.
US Manufecturing Activity
Business activity in the U.S. private sector slipped in September, but remained close to a seven-month peak, according to preliminary data released on Wednesday.
In a report, market research group IHS Markit said that its composite purchasing managers’ index (PMI), covering both the manufacturing and services sectors, dropped to 54.6 in September, from the prior reading of 55.3.
On the indices, a reading above 50.0 indicates expansion, below indicates contraction.
The research group also said that its flash services purchasing managers’ index (PMI) fell to 55.1 in September, from the prior month’s reading of 56.0. That was a two-month low.
Analysts had expected the reading to slip only to 55.9.
Services make up approximately 80% of the U.S. economy which makes the data key for interpreting growth.
Trade Idea
Considering the overall technical and fundamental outlook, buying the precious metal around current levels appears to be a good strategy in short to medium term.
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