On Tuesday morning (August 6th) in the Asian market, spot gold fluctuated narrowly and is currently trading around $2405.84 per ounce. Overnight gold prices fell more than 1% on Monday, hitting a intraday low of $2364.21 per ounce, which happens to be supported by the 55 day moving average. Due to intensified economic concerns, the global market has been sold off more widely. However, analysts say that this is only a temporary correction for safe haven gold, and there are still buying opportunities to support gold prices. Gold prices rebounded above the 2400 mark in the late trading session, closing at $2409.91 per ounce.

The US Wall Street stock market plummeted, and concerns about a recession in the US spread to global markets after last week's weak economic data was released.

Goldman Sachs predicts on Monday that the likelihood of a US economic recession in the next 12 months will increase by 10 percentage points to 25%.

The US stock market closed sharply lower on Monday, with the Nasdaq and S&P 500 indexes both falling at least 3%. The market continued the sell-off that occurred last week due to concerns about the US economic recession, and Apple plummeted due to news of major investors reducing their holdings.

The three major stock indices all recorded their largest three-day percentage declines since June 2022, with the Nasdaq and S&P 500 indices closing at their lowest levels since early May.

The Dow Jones Industrial Average fell 1033.99 points, or 2.6%, to 38703.27 points on Monday; The S&P 500 index fell 160.23 points, or 3.00%, to 5186.33 points; The Nasdaq index fell 576.08 points, or 3.43%, to 16200.08 points.

Earlier in the session, the S&P 500 index fell more than 4% at one point, hitting a daily low of 5119.26 points.

On Monday, the Nikkei 225 stock average price index in Japan closed at 31458.42 points, down 4451.28 points from the previous trading day, setting a historical record for the decline in points, with a drop of 12.40%; The South Korean KOSPI index closed at 2441.55 points, down 234.64 points or 8.77% from the previous trading day, triggering a circuit breaker mechanism; The Straits Times Index in Singapore closed at 3243.67 points, a decrease of 137.78 points or 4.07% from the previous trading day; The Australian ASX 200 index closed at 7649.6 points, down 293.6 points or 3.7% from the previous trading day; The New Zealand NZX 50 index closed at 12264.49 points, down 188.55 points or 1.51% from the previous trading day.

Jim Wycoff, senior analyst at Kitco Metals, said, "Investors are scared and they are selling what they can, including gold and silver

Traders also attribute some of the weakness in the stock market to arbitrage trading, where investors borrow money from low interest economies such as Japan or Switzerland to fund their bets on high-yield assets elsewhere.

However, data shows that US service industry activity rebounded from a four-year low in July, with increased orders and employment. Subsequently, the main stock indexes narrowed their decline in response. Earlier, the gold price gained support near the 55 day moving average, and after the data was released, the gold price rebounded along with the stock market. The market still generally expects the Federal Reserve to cut interest rates in September, and the expectation of a 50 basis point rate cut has heated up, still attracting bargain hunters to support gold prices.

The Institute for Supply Management (ISM) announced on Monday that the US non manufacturing Purchasing Managers' Index (PMI) rose to 51.4 in July, from 48.8 in June, the lowest level since May 2020. PMI data above 50 indicates growth in the service sector, which accounts for over two-thirds of the total economy.

ISM believes that a long-term index above 49 usually indicates an overall economic expansion. Economists previously expected the service sector PMI to rise to 51.0 in July.

In the ISM survey, the new orders sub index rebounded from 47.3 in June to 52.4, the lowest since December 2022. The sub index of employment in the service industry rose from 46.1 in June to 51.1. This will support the view that the significant slowdown in non farm employment growth in July does not necessarily indicate a deterioration in the labor market.

The service industry inflation slightly rebounded in July, but it may not be enough to change the situation where price pressure is weakening. The service industry input price index of ISM rose from 56.3 in June to 57.0.

According to the CME FedWatch Tool, traders currently believe that there is an 86% chance of a 50 basis point rate cut by the Federal Reserve at its next policy meeting in September, and a 14% chance of a 25 basis point rate cut.

Analysts say that given the ongoing economic and political uncertainty, as well as expectations of a Fed rate cut, gold, which has risen over 16% so far this year, may regain its footing.

The US dollar index fell 0.48% on Monday to a near six-month low, providing support for gold prices. Earlier in the session, the US dollar index hit its lowest level since January 12th at 102.15.

Helen Given, a foreign exchange trader at Monex USA, said, "Last Friday's (non farm payroll) report had some impact on the global system, and the market is very concerned that the United States may no longer be a reliable driver of global economic growth

Chicago Fed President Austan Goolsbee said on Monday that Fed policymakers need to carefully monitor changes in the US economy to avoid excessive interest rate restrictions. However, despite weaker than expected employment data, there are no signs of recession.

You would only adopt such a restrictive policy when you believe there are concerns about economic overheating, "Gulsby said in an interview. In my opinion, these data don't seem to be overheated... You see that the employment data is weaker than expected, but it doesn't look like a recession yet. I do believe that when making decisions, you should look ahead at the direction of the economy

However, concerns about the geopolitical situation have eased and the demand for safe haven has weakened, as the current situation suggests that the Middle East conflict will not further escalate.

After Hamas leader Ismail Haniyeh was killed in Tehran last week, an Iranian Foreign Ministry spokesperson stated on Monday that Iran does not want to escalate regional tensions, but believes that Israel needs to be punished to prevent further instability.

Spokesperson Nasser Kanaani said, "Iran seeks to establish stability in the region, but this can only be achieved by punishing aggressors and deterring the adventurism of the Zionist regime (Israel)." He added that Tehran's actions were unavoidable.

Kanani called on the United States to stop supporting Israel, stating that the international community has failed to fulfill its obligation to maintain stability in the region and should support "punishing aggressors".

The Supreme Commander of the Islamic Revolutionary Guard Corps, Hussein Salami, once again declared on Monday that Israel "will be punished at the appropriate time".

Tehran, along with organizations allied with Iran such as Hamas and Hezbollah, have accused Israel of killing Haniyeh, but Israeli officials have not yet claimed responsibility.

On this trading day, investors need to pay attention to the interest rate resolution of the Federal Reserve of Australia, and continue to pay attention to the speeches made by Federal Reserve officials and news about the geopolitical situation.

From a technical perspective, the gold price is relatively high, followed closely by a negative cross star, which increases the short-term bearish signal. It is necessary to guard against further downside risks of the gold price. In the short term, we will continue to pay attention to the support near the 55 day moving average 2365.27. If we lose this position, we may further explore the support near the 100 day moving average 2341.94. Pay attention to the resistance near the 5-day moving average of 2430 above.

Daily chart of spot gold