Vang SJC

Last Friday (29/1), the gold price was escalating as the fourth-quarter GDP largely matched economists’ expectation. The gold price moved in small range between $1,108.21 and $1,118.38/oz, before setting at $1,117.83/oz, up 0.26% compared with the opening price $1,114.22/oz.

The reason for the gold price rise was analyzed here.


Fundamental Analysis

The data in China pointing to the manuafacturing and service sector released during the Asia trading has lifted the gold as a safe-haven asset due to the great demand. The offical manuafacturing managers index (PMI) – China’s official factory gauge fell to 49.4 in January from 49.7 in December, marking the sixth consecutive month of contraction, whlile a separate measure such as Caixin and Markit one also showed a shrinkage as below 50. The official nonmanufacturing PMI fell to 53.5 from 54.4 in December, which still raised the concern.

The figure has added more to the deteriorated Chinese economy outlook as the world’s second-largest economy appeared sluggish. Despite the officials’ effort to boost the economy by cutting interest rates, the economy is in face of the great capital outflow and the outflow in turn triggered the demand for gold as a less risky asset.

Today market centre will be figure of the ISM PMI and the core PCE, also the Europe centre bank with president Mario Draghi due to speak. The ISM manufacturing PMI reported by the Institute for Management Supply is anticipated at 48.6 below 50, indicating the contraction in January. The leading indicator of the economic health will be the evidence showing the slow US economic growth.

The core PCE which measures goods and services consumed by individuals is seen as a Fed’s favorite inflation gauge. The index is expected to remain as low as 0.1%, unchanged compared with the previous months.

The two indicators with softness will support the bullish gold market as the manufacturing and consumer spending will show less contribution to the US economy.

Late in the day, the ECB president is scheduled to testify about the 2015 ECB Annual Report, which will give a further insight about the current economy and the currency market. If the president is expected to set the tone “hawkish”, the dollar will be weaker against euro, and without saying boost other safer assets such as gold.

Regarding the physical demand, the Chinese New Year is coming, hence, the demand for precious metals will double.


Technical Analysis

Currently, at 15:25 pm, GMT +7, the gold price is trading at $1,120.64/oz, up 0.27% compared with the openning price $1,117.39/oz.

Deriving from the chart H1, the current volume trading is thin with the majority of the red candles. During Asia session, the gold price has jumped from the level 61.8% at $1,116/oz, breaking two successive levels, to level 23.6% at $1,123/oz, the Fibonacci retracement showing. The gold price seems to advance, but has not yet broken the level 23.6% as the selling power drags down. The MUA EA signal trend has indicated buying signals since the final moment of last session, therefore give us around 270 points.

According to RSI (14) indicator, the relative strength index shows 60.54 points, above average level at 50, indicating a strong upward trend of the price. The gold price is expected to rise more as the RSI tends to edge up, approaching 70.

Refering to ADX (14) index, the data got 34.72 points, underlining the price uptrend and its corresponding buying power. The +DI has cut the -DI and move above the lower line, pointing out the buying positions outweigh the selling ones. The uptrend is quite clear as the indicator has escaped and been far away from the weak level at 20 points. According to the Bollinger Band, the price movement is in the upper range and above the MA 20 as well.


Sentiment Analysis

More green candles have appeared so far since the beginning the Asia session as the gold demand for the great upcoming holiday. The sideway candles with the downward long shadow have put the gold price down in the next hours, as showed on the chart. Economists predict a smaller increase in new jobs for January, which cast fears about the labor market. The deceleration of the fourth quarter GDP has been an obstacle for the next hike rate as well.

The concern about the slackened Chinese economy,especially its manufacturing sector, and the overall global economic growth, has also directed the market into a better place for investment.

Moreover, the speculation worries over slowing growth in the U.S. will prompt the Federal Reserve to delay future interest rate hikes.

Oil prices fell sharply in Europe trade amid doubts over the likelihood of a deal between Russia and OPEC producers to cut output happening anytime soon. Prices came under additional pressure as the release of weak Chinese manufacturing activity data underlined concerns over the health of the world’s second largest economy. The oil tumble will lead to a turbulence for the global equities market.

Gold is widely seen as an alternative currency in face of global economic uncertainty and a refuge from financial risk.



The Bank of Japan (BoJ) Governor Rukoda has adopted the negative interest policy and a huge easing amount to encourage the national economy and to fight back the deflation. The central bank has stated that the bank will take more action if necessary. The BOJ’s move has supported the major stock indices in Asia and also boosts the dollar against yen. The depreciation of the US currency will put the gold aside as the gold doesn’t offter interest.

The oil decline will take another negative effect on the gold price as the demand for oil-led inflation has been offset.

The nonfarm payroll due late this week will weigh on the price of the gold if the data is likely to create more than 200,000 jobs last month. Not to mention the positive job growth will boster the confidence of Fed to raise the interest rates, which makes the opportunity of holding gold more precious.

Market Commentary

Today, the gold price will possibly rise as the downbeat manufacturing data in China, pointing out the further slowdown of the world’s second largest economy. Also ahead of the US manufacturing PMI, the gold price is predicted to be around $1,130/oz.

However, as mentioned in the Risk sector, the gold price may go down as low as $1,111/oz.

Analyses of Group Fiinvesting



Linh Nhan