Gold jumps to $1550 as US Dollar tumbles after US data
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- Yellow metal gains more than $20 boosted by risk aversion and economic data.
- DXY reverses sharply following ISM report, falls to negative territory from multi-year lows.
Gold prices extended gains following the release of the US ISM manufacturing report. It climbed to $1,549.70/oz reaching the highest level since Thursday and five dollars below the YDT high established August 26.
US Dollar reverses, Gold firm
Gold was already trading higher hovering around $1,530 and it soared after later on the back of US data. The ISM Manufacturing report came in at 49.1 in August, below the 51.0 expected, down from the 51.2 July reading. “ISM manufacturing dropped below the magic 50-mark in August, pointing to a manufacturing sector contraction for the first time since early 2016. Four of five subcomponents are below 50. We expect the downward trend to remain intact in coming months”, mentioned Nordea analysts.
The report triggered a decline in equity prices and US yields. The 10-year fell to 1.43%, the lowest in years and weigh on the US Dollar. The DXY erased practically all of its gains, reversing sharply from the highest in two years.
Levels to watch
The yellow metal is testing the $1,550 area, above attention would turn to $1,555 (YTD high). The next resistance is seen at $1,565. On the flip side, support levels now are seen at $1,533 (Aug 30 high), $1,525 (Aug 27 low) and $1,516 (Aug 30 low).
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