- The gold posted a new 11-month high of 1339.6 amid increased risk aversion due to North Korea nuclear test.
- The forex traded in an overall choppy market, with non-U.S. dollar currencies mixed. Major data both from EU and America like July durable goods order MoM are eyed on the day.
Gold rose on Monday (2 September) amid risk aversion tone on the back of another North Korea nuclear test to a new 11-month high. However, the yellow metal upside room was capped in a light New York trading as U.S. observe Labor Day holiday. Meanwhile, the forex traded in an overall choppy market with the dollar index pulled back slightly in Asian and London session before bounced back a bit in late New York session, approaching H1-period EMA60 resistance. We will get some important macro data, including August service PMI both in EU and UK, EU July retail sales (MoM) and U.S. July durable goods order (MoM), and multiple Fed speakers in the agenda.
The dollar index (DXY) fell back slightly and stabilized at its short term supports circa 92.4 which were highlighted in our research report published yesterday. The index short term movement is volatile given its short term moving averages descend a bit in a state of convergence while its long term moving averages have started to drift slowly in a state of incomplete divergence on the 1 hour chart. It will be interesting to watch whether or not the index could fall again on the day, with resistances at 92.61 and 92.86, support at 92.19.
（DXY H4 chart）
As to non-U.S. currencies, the euro traded in a choppy market after bouncing back a bit. The single currency directionless short term prospect still remains intact as it consolidated on 4 hour chart whereas moved up on daily chart. The pound retreated after consolidation, creating bearish divergence in its MACD indicator on 1 hour chart. The currency pair is retesting its H1-period EMA60 support. Whether or not its short term moving averages could stay above its long term moving averages will be important to observe. The Aussie dollar traded in a narrow range as the commodity currency seemed to await latest policy decision from RBA at its September meeting. Its upside resistances stand at 0.8 handle and prior swing high at 0.80637 while its downside supports rest at EMA30 follow by EMA60 on its daily chart.
（GBP/USD H4 chart）
Now let us take a look at precious metals. The gold hit a near 11-month fresh high and reached 1339.6, which was at the upper boundary of a trading range during the month of July to September. It will be interesting to watch whether or not the yellow metal could hit another new high after consolidation in a narrow range in London and New York session. The price action of the gold needs to be corrected given its short term moving averages have shown a tendency of convergence well above its long term moving averages on 4 hour chart. It would be prudent to employ a two-track strategy on the day, firmly focus on changes in the moving. The support level to watch rests at around 1324.5.
（Gold H4 chart）
By JasonZou —— Chief Analyst of AvaTrade China
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.