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India has announced a 625 billion rupee mobile phone incentive program.On August 21st, Chris Williamson, Chief Business Economist at S&P Global Insights, stated that U.S. businesses are thriving, with companies reporting that output growth reached its fastest pace in over four years as the third-quarter economic expansion strengthened further in August. Third-quarter survey data currently shows an annualized growth rate close to 3.0%, a significant increase from the 1.5% growth rate in the second quarter. Job growth in August also showed a welcome recovery, with employer confidence strengthening as concerns about the negative impacts of tariffs and the Middle East conflict gradually subsided. However, the latter remains a key area of focus for businesses, particularly its impact on supply chains and energy prices. Supply chain delays were reported again in August, at their most severe in the past four years, significantly constraining output for many companies. While price pressures have eased somewhat, they remain high and could easily face renewed upward pressure if energy prices rise again. Meanwhile, the growth momentum between the second and third quarters has shifted from manufacturing to services. With depleted safety stocks and supply chain delays dampening factory production growth, the service sector is now playing a key role in driving the continued expansion of the U.S. economy.S&P Global: U.S. business growth hit a 52-month high in August, driven by a surge in service sector activity and rising optimism. Price pressures eased somewhat.S&P Global: The U.S. Manufacturing PMI preliminary reading for August was 53.2, a five-month low; the Composite PMI preliminary reading for output was 56.0, a 52-month high; the Services PMI preliminary reading for business activity was 56.8, a 20-month high; and the Manufacturing PMI preliminary reading for output was 51.9, a 13-month low.Goldman Sachs: Further recovery in demand from Western investors and continued strong demand from central banks could push gold prices toward key strike price levels, where hedging by traders could accelerate the rally.

Before the US PMI is released, the gold price is expected to rise beyond $1,740 per ounce

Daniel Rogers

Aug 23, 2022 14:48

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On the back of conflicting forecasts for US Purchasing Managers Index (PMI) data, the gold price (XAU/USD) is trying to break above $1,740.00. A new monthly low of $1,727.85 was recorded for the precious metal on Monday, but it has since rallied strongly. Given the lack of impetus in the upward trend, the gold price is likely to stay volatile. However, a pullback may be less profitable.

 

The consensus for the S&P Global Manufacturing PMI is 51.5, which is down from the prior reading of 52.2. When compared to its previous reading of 47.3, the Services PMI has room to grow.

 

The yellow metal has been supported by the disappointing early estimates of US Durable Goods Orders. From a previous release of 2%, the market expects the economic figures to sharply decrease to 0.5%. It's important to note that the most recent reading showed no change in underlying pricing pressures, which stood at 5.9%. So, we expect to see little change, if any, in the Durable Goods Orders numbers. Unfortunately, a precipitous drop in economic statistics portends a precipitous drop in demand.

 

The other thing that will be in the spotlight is Federal Reserve (Fed) chair Jerome Powell's remarks from the Jackson Hole Economic Symposium. US economic conditions and Fed Powell's direction on inflationary pressures and interest rates will be determined by him.

 

Gold prices on an hourly scale are looking to continue their recovery after breaking above the $1,729.44 61.8% Fibonacci retracement (set from the low of $1,680.91 on July 21 to the high of $1,807.93 on August 10). Gold has been testing the resistance of the 20-period Exponential Moving Average (EMA) around $1,738.00; a sustained move above this level would signal a change in trend toward the bullish side.

 

Furthermore, the Relative Strength Index (14), which had been negative in the 20.00-40.00 range, has moved into the bullish 40.00-60.00 zone, indicating that gold prices are currently not bearish.

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