Basic Overview
Last Friday, Fed Chairman Powell delivered a more dovish-than-expected speech at the Jackson Hole Symposium, leaving the door open to a 50 basis point rate cut at the September meeting. Saying that they will do everything they can to support a strong labor market was crucial.
This is a positive driver for the precious metal, in the big picture gold should remain supported as real yields decline as we head into the Fed easing cycle, but in the near term strong US data could provide some pullbacks along the way.
Technical Analysis of Gold – Daily Time Frame
Gold daily
On the daily chart, we can see that gold retested the broken resistance-turned-support at the 2480 level and eventually extended the gains after Powell’s dovish speech.
Buyers remain in control of the market and should target a new record high. On the other hand, sellers will want to see the price drop back below the 2480 level to invalidate the breakout and move down to the 2360 level.
Gold Technical Analysis – 4 Hour Time Frame
Gold 4 hours
On the 4-hour chart, we can more clearly see the bounce around the 2480 support where we also had a trend line confluence.
Buyers will likely continue to rely on the trend line to move towards new highs, while sellers will want to see the price break below support to regain control and move towards new lows.
Technical Analysis of Gold – 1 Hour Time Frame
gold 1 hour
On the 1-hour chart, we can see that the price broke the opposite trend line after Powell’s speech and is now trading near a major minor resistance where the price has been rejected multiple times.
Buyers will want to see the price move higher to increase bullish bets to new highs, while sellers will likely be counting on that to take a position to break support. The red lines mark the average daily range for the day.
Upcoming incentives
Tomorrow we have the US Consumer Confidence report. On Thursday we get the latest US Jobless Claims numbers. On Friday we conclude with the US Personal Consumption Expenditures report.