The market awaits important information from the central bankers meeting in Jackson Hole, Wyoming. In the midst of this wait, gold prices experienced a slight pullback from the recent declines. Key debates over the economic outlook and interest rate decisions keep investors on their toes.
Gold finds support ahead of Jackson Hole Symposium
Investors are turning their attention to the Jackson Hole Economic Symposium, which begins Thursday. The downside momentum of the gold price seems to be exhausted after stabilizing below the critical support of $1,900. Investors will look for clues about the Fed’s roadmap to achieve price stability without deviating from the low unemployment rate.
cryptocoin.com Fears of a recession in the US economy have subsided due to tight labor market conditions and strong consumer spending momentum supported by steady wage growth. The new forecasts for the Fed’s interest rate guidance indicate that it will keep interest rates at high levels until March 2024.
Dollar strength forces gold’s rise!
In the foreign exchange area, the stable stance of the dollar above the 103 level continues to push the progress of gold. The focus of global markets is Fed Chairman Jerome Powell’s upcoming speech. Markets will watch to see if Powell’s comments align with the latest hawkish tones in the FOMC minutes.
In particular, most economists polled by Reuters suggest that there is a slight trend towards those who believe the Fed can stop further rate hikes and a potential cut could only occur after March.
Daily market movements before Jackson Hole
- The downside momentum of the gold price subsided after stabilizing below the critical support of $1,900.00. However, there seems to be more downside trend.
- The precious metal continues to face a tough sell-off as the US Dollar Index (DXY) offers a five-week streak.
- Yields on 10-year U.S. Treasury Bonds rose to 4.3% as investors expect the Fed to raise interest rates further in the context of still high inflation.
- Minutes from the Federal Open Market Committee’s (FOMC) July policy meeting showed the central bank would be more reliant on incoming data for further action.
- The majority of Fed policymakers think interest rates have yet to peak as labor market conditions are still tight and strong wage growth boosts household disposable income.
- A Reuters poll shows that the Fed will hold interest rates steady in September. He also points out that he will not cut interest rates before March next year.
- Meanwhile, the probability of a recession has dropped to 40%, its lowest level in a year. The waning of recession fears, the tight labor market and persistent “last mile” inflation could force the Fed to keep interest rates higher for longer.
Technical analysis: The long-term trend in gold price turned bearish
Market analyst Sagar Dua evaluates the technical outlook for gold as follows. Gold price made a new low marginally below $1,885.00 on the daily timeframe. Then it started to move back and forth. For the past three weeks, every pullback in the precious metal has been viewed by market participants as a selling opportunity. The yellow metal is trading below the 200-day Exponential Moving Average (EMA), which indicates that the long-term trend is bearish. Momentum oscillators indicate that the downtrend is extremely strong. It also indicates that volatility will continue to remain high.
Short term forecast for gold price
Market analyst James Hyerczyk explains his short-term expectations for gold as follows. The immediate future of gold is highly dependent on central bank movements and sentiments. The slight recovery of the yellow metal will likely come to the test after Powell’s speech. Also, it’s possible that any pigeon or hawk cue catalyzes the changes. Meanwhile, SPDR Gold Trust posted a 0.3% gain for the first time since the end of July. This indicates continued investor interest in the precious metal. Gold moves on a balancing trajectory between global economic signals and internal demand dynamics.
Gold price 4 hour chartThe current 4-hour price of gold is at 1889.17. That is, slightly below the previous 4-hour price of 1892.56. This points to a minor retracement. More importantly, this price is below both the 200-4H moving average (1938.00) and the 50-4H moving average (1905.90). So this indicates a bearish trend in the short term. Below the neutral 50 mark of 36.46, which is a 14-4H RSI. This indicates that the momentum is weakening, leaning towards the oversold region.
The current price is approaching the main support area, which ranges from 1,893.07 to 1,885.79, potentially acting as a backdrop for the commodity. However, considering all technical indicators, the current market sentiment for gold on the 4-hour chart is bearish. However, it is vulnerable to a short-term countertrend pullback.
