Gold rebounded above a six-week low to $1,287.43 per ounce on Thursday, as the dollar index turned lower and ushered in short-covering after testing the resistance of 93.5.
We believe that technical factors were behind yesterday’s gains as the market was quiet and technical Fibonacci support for gold was at $1,281.
Bullion’s strength will be determined by the movement around the key mark of $1,296 and $1,300 in the near term. A successful breakthrough will trigger a new round of rally.
On the daily chart, the resistance above will determine gold’s future direction. Without an effective breakthrough, investors will maintain their bearish view on gold. On Friday, U.S. Consumer Spending in August and Michigan University Consumer Confidence Index in September will be released. Investors shall closely watch their impact on gold prices.
Spot silver closed at $16.85 an ounce on Thursday, remaining unchanged for the second consecutive day. Investors shall keep an eye on the movement around $17. The trading strategy will be same with gold. The dollar shall be closely watched in case geopolitical worries over North Korea remain subdued.

 
Dealing Room, ICBC Beijing Branch
Qin Gang

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