Gold Price Talking Points
The worth of gold threatens the month-to-month low ($1754) after failing to check the July excessive ($1814), and failure to defend the opening vary for August might lead to an additional decline within the valuable metallic because it extends the collection of decrease highs and lows.
Gold Price Threatens Monthly Low After Failing to Test July High
The worth of gold trades again beneath the 50-Day SMA ($1776) because it offers again the advance following the Federal Open Market Committee (FOMC) Minutes, and bullion might monitor the detrimental slope within the transferring common to largely mirror the worth motion from June.
It appears as if the weak point throughout valuable metallic costs will persist so long as the Federal Reserve sticks to its hiking-cycle, and it stays to be seen if the central financial institution will modify the ahead steerage at its subsequent rate of interest resolution on September 21 as Chairman Jerome Powell and Co. are slated to replace the Summary of Economic Projections (SEP).
Until then, expectations for larger US rates of interest might proceed to drag on the worth of gold because the FOMC insists that “moving to a restrictive stance of the policy rate in the near term would also be appropriate from a risk-management perspective because it would better position the Committee to raise the policy rate further, to appropriately restrictive levels, if inflation were to run higher than expected.”
Source: CME
However, hypothesis for a shift within the Fed’s strategy for combating inflation might heighten the enchantment of gold because the CME FedWatch Tool displays a 60% chance for a 50bp fee hike in September, and bullion might largely protect the advance from the yearly low ($1681) because the FOMC acknowledges that “it likely would become appropriate at some point to slow the pace of policy rate increases.”
With that stated, waning expectations for an additional 75bp Fed fee hike might restrict the draw back threat for the worth of gold, however the valuable metallic might monitor the detrimental slope within the 50-Day SMA ($1776) following the failed try to check the July excessive ($1814).
Gold Price Daily Chart
Source: Trading View
- The worth of gold seems to have reversed course forward of the July excessive ($1814) because it trades again beneath the 50-Day SMA ($1776), and the valuable metallic might monitor the detrimental slope within the transferring common because it threatens the opening vary for August.
- Lack of momentum to maintain above the Fibonacci overlap round $1761 (78.6% growth) to $1771 (23.6% retracement) might push the worth of gold in the direction of $1725 (38.2% retracement), with the subsequent space of curiosity coming in across the $1690 (61.8% retracement) to $1695 (61.8% growth) area.
- However, the worth of gold might clear the bearish worth collection if it manages to bounce again from the month-to-month low ($1754), with a transfer above the overlap round $1761 (78.6% growth) to $1771 (23.6% retracement) bringing the month-to-month excessive ($1808) on the radar.
— Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong