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Gold Flash Crash Reversed, Fed Gears Up for Taper Signal

Gold Flash Crash Reversed, Fed Gears Up for Taper Signal

Justin McQueen, Strategist
Gold Chart

Gold Price Analysis and News

  • Gold Flash Crash Reversed
  • Fed Gearing Up for Taper Signal

Gold Flash Crash Reversed

In a week that kicked off with a flash crash with Gold dropping 4.5%, the precious metal is closing the week with marginal weekly gains. Although, what is perhaps more important is the break back above 1760, which has been the key pivot for the precious metal over the past year.

Gold Chart: 10 Minute Time Frame

Gold Chart

Source: Refinitiv

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Topside Levels in Focus

Now that 1760 has been taken out the focus for gold bulls will be resistance situated at 1790-1800, which previously acted as support the prior month. That said, while the most recent downtick in the greenback and US yields has stemmed from weak U. of Michigan sentiment data, I expect downside in the USD to be limited as the Fed near the time by which they provide a taper signal, possibly as soon as this month at the Jackson Hole Symposium. The implications for gold, however, is likely to mean that 1790-1800 possibly holds on its first test. What’s more, a cluster of DMA’s from 1800-1815 will make the psychological 1800 level a tough area to crack.

Fed Gearing Up for Taper Signal

Looking ahead to next week, Chair Powell is on the docket, although, given that he will be hosting a town hall with teachers from across the US, it may be unlikely that he makes a comment regarding any notable shifts to monetary policy and instead waits another week to discuss at the Jackson Hole Symposium. Elsewhere, the FOMC minutes will be released and in light of the recent Fed members talking up tapering for this year, the minutes are unlikely to be on the dovish side.


Fed’s Barkin (2021 Voter)

On prices, the Fed has made substantial further progress towards benchmark. Looks like labour market has more room to run.

Fed’s Bostic (2021 Voter)

Thinks Fed could start to taper purchases between October and December, but open to moving forward. Substantial further progress goal on inflation has effectively been met, could achieve on employment if there is another month or two of strong jobs gains.

Fed’s Rosengren (2022 Voter)

Fed should announce in September that it will begin reducing its $120bln in purchases of Treasury and Mortgage Bonds this fall.

Fed’s Evans (2021 Voter)

Would like to see a few more employment reports ahead of a decision to taper asset purchases.

Gold Price Chart: Daily Time Frame

Gold Chart

Source: Refinitiv

Gold Mixed
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -2% -13% -5%
Weekly -14% 3% -10%
What does it mean for price action?
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