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Gold Price Outlook – More of the Same Ahead of FOMC, Jackson Hole

Gold Price Outlook – More of the Same Ahead of FOMC, Jackson Hole

Nick Cawley, Strategist

Gold Price (XAU/USD) Price, Chart, and Analysis

  • Gold sits in the middle of a prior multi-week range.
  • Jackson Hole Symposium gives Fed chair Powell some breathing space.

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The FOMC minutes, released later in today’s session, have been seen of late as a potential turning point in US monetary policy with market’s hoping that they may provide some clarity on the central bank’s thinking about when they may shift course on policy, notably tapering of the current $120 billion a month bond-buying program. Traders however may be disappointed by today’s release, especially with next week’s Jackson Hole Symposium - ‘Macroeconomic Policy in an Uneven Economy’ - giving chair Powell slightly more breathing space and a global stage to announce any changes. Today’s FOMC meeting may see ‘more of the same’, leaving traders little to work within the days running into the Jackson Hole event.

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After quickly recovering all of the Asia crash, gold is nearing highs last seen just before the August 6 jobs report release that showed 943k new jobs created, beating market estimates. This report saw the US dollar jump higher, sending gold into the start of a tailspin lower.

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The precious metal is now back in the middle of an old, multi-week trading zone, with support and resistance defined by 50% and 38.2% Fibonacci retracement respectively. Ahead of the Jackson Hole meeting this range should continue to hold, absent any surprises later today, with resistance looking a tough level to overcome.

Gold (XAU/USD) Daily Price Chart (November 2020 – August 18, 2021)

Retail trader data show 70.42% of traders are net-long with the ratio of traders long to short at 2.38 to 1. The number of traders net-long is 2.78% lower than yesterday and 12.41% lower from last week, while the number of traders net-short is 7.59% higher than yesterday and 6.05% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.

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What is your view on Gold – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.