Gold Technical Analysis – Eyes on Fed Chair Powell and the NFP report

Fundamental Overview

Gold continues to trade in a tight range ahead of Powell’s speech and the NFP report in September. The market participants continue to look for strong reasons to trigger a breakout on either side. Right now, there’s still uncertainty around the interest rates outlook as a hot NFP in September could flip expectations pretty quickly.

Last week, the market got some support from the US CPI as the data came mostly in line with expectations. In the following days though, we got some hottish data with the US PPI beating expectations by a big margin, the US Jobless Claims improving further and the inflation expectations in the UMich survey surprising to the upside.

That saw traders trimming their aggressive rate cuts expectations and we got back to price 53 bps of easing by year-end compared to 64 bps after the US CPI release. The focus has now switched to Fed Chair Powell’s speech at the Jackson Hole Symposium on Friday. Traders will be eager to see if he changes his stance as well. Most likely though, he won’t pre-commit to anything and just reiterate that they will decide based on the totality of the data.

In the bigger picture, gold should remain in an uptrend as real yields will likely continue to fall amid Fed easing. But hawkish repricing in interest rates expectations will likely keep on triggering corrections in the short term.

Gold Technical Analysis – Daily Timeframe

On the daily chart, we can see that gold continues to trade right in the middle of the range defined by the key 3,438 resistance and the 3,245 support. There’s not much else we can glean from this timeframe as market participants will likely continue to play the range until we get a breakout on either side. We need to zoom in to see some more details.

Gold Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have a minor support zone around the 3,330 level. That’s where the buyers continue to step in with a defined risk below the support to position for a rally back into the 3,438 resistance. The sellers, on the other hand, will look for a break lower to pile in for a drop into the 3,245 support next.

Gold Technical Analysis – 1 hour Timeframe

On the 1 hour chart, there’s not much else we can add here as the buyers will look for a rally from the support, while the sellers will look for a break and a drop into the next support. The red lines define the average daily range for today.

Upcoming Catalysts

Tomorrowwe have Fed’s Waller speaking and the FOMC meeting minutes. On Thursday, we get the US Flash PMIs as well as the US Jobless Claims figures. Finally, on Friday, we conclude the week with Fed Chair Powell speech at the Jackson Hole Symposium.

Watch the video