Key events to affect XAU/USD prices (Sep 30 - Oct 06)

Hello, fellow traders!

We’ve got several crucial for Gold economic indicators and events coming up this week: from manufacturing data in China to employment figures in the United States, and potential hints on the future of monetary policy from Feds.

Here’s a snapshot of all the high-priority economic events for September 30 - Oct 06.

Let's dive into the specifics:

Monday, September 30

• China’s NBS Manufacturing PMI: measures the performance of the manufacturing sector in China. It is based on a monthly survey of purchasing managers in the manufacturing industry.

  A reading above 50 indicates that the manufacturing sector is expanding, while a reading below 50 shows contraction.

• China’s Caixin Manufacturing PMI: measures the health of the manufacturing sector in China. It is based on surveys of purchasing managers at manufacturing companies but it focuses more on small to medium-sized private companies, while the NBS PMI covers larger, state-owned enterprises → it can show how the broader, non-governmental part of China’s economy is performing.

  A PMI above 50 indicates expansion and below 50 indicates contraction.

  • Why it matters for Gold: China is one of the largest consumers of Gold, both for industrial purposes and as a store of value (like jewelry and investment).

    • PMI above 50 (Expansion):

      → It could signal economic strength in China, leading to increased demand for Gold in industrial uses.

      → A stronger Chinese economy could also boost global risk appetite, making Gold less attractive as a safe haven. In this case, XAU/USD might face some downward pressure or trade sideways.

      → Chinese yuan can also strengthen and make Gold more expensive for Chinese buyers, reducing the demand.

    • PMI below 50 (Contraction):

      → This could lead to fears of an economic slowdown, prompting investors to flock to Gold for safety and push XAU/USD prices higher.

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• Germany’s + Italy’s Inflation Rate YoY Prel: measures the percentage change in the prices of goods and services over the past year.

  • Why it matters for Gold: Inflation is a crucial indicator of economic health, affecting everything from consumer spending to monetary policy.

    The European Central Bank (ECB) uses inflation rates from countries like Germany and Italy to make decisions on interest rates and other monetary policies aimed at maintaining price stability across the Eurozone.

    • High Inflation (above 2%) can erode purchasing power, making everyday goods and services more expensive.

      → It could give Gold a slight boost at first as investors turn to Gold as a safe-haven asset.

      → It can also raise concerns about rising prices across the Eurozone and lead the ECB to consider tightening monetary policy. This typically leads to a stronger Euro could result, which might put downward pressure on Gold prices.

    • Low inflation (below 2%) can signal weak demand in the economy, potentially leading to stagnation.

      → It might ease pressure on the ECB to raise interest rates. This could weaken the Euro, making Gold more attractive to investors, particularly those seeking to protect against currency depreciation.

      → It might indicate economic weakness, further increasing demand for XAU/USD as a safe asset.

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• (The U.S.) Fed Chair Jerome Powell: Fed Chair speeches are highly impactful, and traders closely watch for any subtle clues regarding future monetary policy, which can quickly influence the XAU/USD market.

  • Why it matters for Gold: Powell’s speech can provide insights into the Federal Reserve's plans for interest rates.

    In short:

    → rate hikes → strong USD → Gold prices down.

    → rate cuts → weak USD → Gold prices up.

    Powell might also discuss the current state of the U.S. economy. If he expresses concern about economic growth or talks about potential risks (like inflation or recession fears), it could increase safe-haven demand for Gold, pushing XAUUSD higher and vice versa.

Tuesday, October 1

• Eurozone’s Inflation Rate YoY Flash: shows the annual change in the prices of goods and services in the Eurozone. It's called a "flash" estimate because it gives a preliminary view of inflation before the final data is released later in the month. This report measures the overall inflation across the Eurozone, based on changes in the prices of items like food, energy, and services.

  • Why it matters for Gold: it impacts both inflation expectations and ECB policy. Rising inflation usually supports Gold, while lower inflation can lead to weaker Gold prices unless it triggers expectations of prolonged monetary easing.

    • High inflation (above 2%):

      → might cause fear of rising prices and currency devaluation. This could increase demand for Gold as a hedge, pushing XAU/USD prices higher.

      → expectations of ECB interest rate hikes might counterbalance this, creating mixed pressure on Gold.

    • Low inflation (below 2%):

    • → could signal weak economic activity and less pressure on the ECB to raise rates. This may weaken the euro and support Gold prices in the short term due to lower interest rates. XAU/USD might see upward momentum in this case.

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• The U.S. ISM Manufacturing PMI: