International spot gold Tuesday (September 1) volatile rebound, after a short – term sharp fall and quickly regain its footing, and launched a counterattack again, intraday as high as $1992.10 / ounce, briefly rose to nearly two weeks high, to stand back to the $2000 mark. A fall in the dollar index to a fresh 28-month low was a useful support for gold as the impact of the Federal Reserve’s new policy continued to mount. But the Fed is still in a difficult position. It doesn’t seem to want to make a commitment until the situation is clearer, and it’s hesitating about whether it needs to act before the election.
A raft of us economic data was released today, including the Markit manufacturing index, which recorded a reading of 53.1 in August, which was lower than expected but still a sign of recovery. Chirs Williamson, chief economist at IHS Markit, the market research firm, said: “The improvement in the manufacturing sector strengthened further in August, suggesting that production in the third quarter will rebound strongly from the sharp decline in the second quarter.” That has curbed some safe-haven demand, but rising tensions between China and India and the U.S. have kept gold’s overall support solid.
India today reported on September 1 that during a brief stand-off on August 29, solstice 30, the Chinese army attempted to unilaterally change the status quo by deploying cameras and surveillance equipment on high ground near the southern bank of the lake, which is currently occupied by the Indian side.
Sources said that the Indian army preempted the position and took down the Chinese cameras and surveillance equipment after taking high ground on the Indian side of the LINE of Actual Control (LAC). In addition, the Indian army has been deploying anti-tank missiles in the mountains since last week, which could target any Chinese action in the region.
In China and the US, media reported that a US university suddenly expelled all Chinese visiting scholars. The Denton Chronicle, a local newspaper, quoted a university of North Texas spokesman as saying the decision was limited to 15 visiting researchers funded by CSC and “does not affect any other students enrolled and studying at the university.”
At a regular press briefing on Sept. 1, Chinese Foreign Ministry spokeswoman Hua Chunying responded, “I noticed a lot of reports on this this morning. If true, it would be another example of Americans sabotaging people-to-people and cultural exchanges for some time.”
Technically, gold has established its rally since mid-March from trendline support and is looking upward. If the daily close is above the choppy high acting as resistance on 2015.65, it seems likely to set the stage for testing the record high of 2076.58.
The daily chart shows that the pullback since gold’s August high has not broken the uptrend line since March. After ramping up support around 1900, it has now broken through a bullish flag shape. The short term has stood above the 20-day average 1970 back below 2000 and may challenge the level within days.
If the effective upper break will open up the rising space, the subsequent upper initial target is brineland upper orbit 2050, and the further target is August high 2090 and 2100.
Separately, the London Bullion Market Association (LBMA) said it tracked 8,790 tonnes of gold in July, both record highs above $555bn. In July, the holdings it tracks fell for the fourth month in a row to 34,022 tonnes, or a record $26.3bn.
“The Fed has said it can keep inflation above its 2 percent target for some time and it looks as if they will keep monetary policy extremely loose, which should help gold,” said David Madden, market analyst at CMC Markets UK.
“A shift in Fed policy is likely to reignite the ‘inflation trade,’ which has historically favored hard assets such as gold,” Kitco Metals senior analyst Jim Wyckoff said in a report.