Gold price surges intraday, could it face a correction to $1972?

Gold has risen by around 0.73% so far, with the current price oscillating around 2004.

This trading day coincides with the International Labor Day, and most financial markets worldwide are closed. Meanwhile, this week will see the release of the Fed interest rate decision, ECB interest rate decision, Bank of England interest rate decision, and US nonfarm payroll report. It is expected that the market will exhibit some cautiousness, and overall trading may be somewhat limited.

Important data releases to watch out for today:

The US April ISM manufacturing PMI was higher than the previous value, indicating an improvement in US manufacturing health in April, which may drive a brief gold price surge. However, overall, the PMI is still below the boom-bust line of 50.

The following chart shows that the gold price has been oscillating in the range of 1976-2004 since April 21st.

Based on technical indicators, the D line in the Stoch line is below the K line, which may indicate a recent downward trend in gold prices, but the downward trend may have slowed down or is about to end. At the same time, the RSI line is slowly rising at 44, which suggests that the gold price is likely to rise, but the upward trend may be relatively slow. The MACD line is still rising above zero, and the buyer histogram is gradually rising, which also signals a gold price surge.

Taken together, these indicators show that the current downward trend in gold prices has slowed down or is about to end. Due to the impact of the PMI value release, gold prices may face a short-term upward trend.

So, is a correction in the gold price imminent?

What is a gold price correction?

A gold price correction refers to a period of decline in gold prices. This decline may be caused by various factors, including a drop in market demand, an improvement in economic data, and a strengthening US dollar. Corrections are usually temporary and do not represent a long-term trend change.

For investors, a correction in gold prices may be seen as an opportunity because lower prices allow them to buy gold at a lower cost, thereby obtaining greater profits when the market rises in the future. However, investors should be aware of the uncertainty and risks associated with the gold market and should make decisions by understanding market trends and fundamentals.

Uncertainty 1 - Is the US economy strong?

Last weekend, First Republic Bank was taken over by the Federal Deposit Insurance Corporation (FDIC), with JPMorgan and PNC Financial Services Group submitting final bids for the bank in an auction hosted by the FDIC. This indicates that the assets and liabilities of the bank have been properly managed and disposed of, thereby alleviating market concerns about the US banking industry and suppressing the rise in gold prices.

However, on the other hand, the decline in Treasury yields has provided support for gold prices.

Uncertainty 2 - Will the Fed maintain its hawkish stance on interest rates?

Now it seems that the Fed's rate hike is almost certain, and a correction in gold prices is also expected.

Looking at the gold daily chart, the support level is currently around 1972.93, with strong support at around 1950.71. If the impact of this rate hike causes the gold price to fall below 1972, given all the current information, the likelihood of the gold price further falling to around 1950 is still relatively small.

Important data releases to watch out for tomorrow:

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