Gold prices fell significantly during the trading week as there was a lack of genuine interest in owning the shiny metal. Meanwhile, the yellow metal fails to maintain its August opening range as it drops to a new monthly low of $1,746. Analysts interpret the market and paint a picture of gold from a technical perspective.
Basic forecast for gold prices: Neutral
cryptocoin.com As you follow, gold prices fell for five consecutive days. This marks the longest range of losses since November 2021. According to market analyst David Song, the recent price action increases the scope for further declines in the precious metal as it continues a series of lower ups and downs. The analyst continues his evaluations in the following direction.
However, it is possible that the developments from the USA will affect the gold price. Because the core PCE, which is the preferred inflation indicator of the Central Bank, shrank to 4.7% in July from 4.8% in the previous month. So, there is evidence that price pressures are easing. This encourages the Federal Open Market Committee (FOMC) to implement smaller rate increases in the coming months. Therefore, it is possible to create a bullish reaction in gold prices.
As a result, the FOMC is likely to change its approach to fighting inflation in order to provide a soft landing for the US economy. Meanwhile, President Jerome Powell and Co. The Central Bank is scheduled to update its Economic Forecasts Summary (SEP) on September 21 as an interest rate decision.
Until then, data from the US is likely to change the price of gold. That’s because the FOMC made a commitment to “adjust the stance of monetary policy appropriately if risks arise that could prevent the Committee from achieving its goals.” However, as long as the FOMC continues to impose higher interest rates, weakness among precious metals is possible.
However, the yellow metal failed to maintain its August opening range. Therefore, gold is likely to struggle to sustain its rise from its yearly low ($1,681). But a slowdown in the core US PCE is likely to bolster the precious metal if it curbs bets on another 75bps Fed rate hike.
“Strong dollar continues to put pressure on gold prices”
Gold price slumped below $1,750, its lowest level since the end of July. Strategists at Commerzbank highlight the yellow metal’s problems to see gains. In this context, strategists make the following assessment:
The marked decline in gold prices during the month is likely to have created additional buying interest. Also, stocks need to be replenished after months of suppressed imports. But it is doubtful whether the gold price will benefit from this. Meanwhile, Chinese purchases are offset by persistent exits from gold ETFs. Further tightening of monetary policy and the expectation of a stronger US dollar, at least until the end of the year, continue to put pressure on the gold price trend.
All eyes on the Jackson Hole symposium
Gold prices are consolidating on the downside. All eyes are now on the Jackson Hole Symposium scheduled for next week. According to TD Securities economists, the repricing of Fed expectations will drive the market. Economists make the following statement on the subject:
Chairman Powell’s remarks next week are likely to be an important way for the Fed to backtrack against the significant easing in the immediate aftermath of the rate hike cycle. It is possible that this is inconsistent with the Fed’s inflation mandate. Speculative appetite for precious metals is dwindling as market expectations for rate cuts fade.
Weekly technical analysis of gold prices: The market is falling
Market analyst Christopher Lewis, in his own unique way, analyzes the technical outlook of gold as follows. Gold markets deteriorated significantly over the week, falling to the $1,760 region. There is a gap just below the $1,750 level which is easily visible on the daily chart. It’s worth noting that this is a market that will continue to be very noisy. But we are certainly prepared to keep falling. Also, we close towards the very bottom of the candle. That typically means there will be some follow-up.
It should also be noted that the US dollar has strengthened and of course interest rates have started to rise again. This was a relatively slow-moving train wreck in the gold market. Hence, it confirmed that the $1,800 level will continue to attract a lot of attention. The 50-Week EMA is at $1,827 and it is falling. That’s why I think you have to go through all of them to consider a long-term trade up.
By the way, the size of the candlestick is also remarkable. Because it swallowed the previous few weeks. That tells me there are more people joining. So I think it’s quite logical that we continue to see interest in short-circuiting. However, real support is likely closer to the $1,700 level. If we go below that, there will be a big change in the attitude of gold in general. On the other hand, if we remove the 50-Week EMA, the market is likely to be looking at the $1,900 level.
