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Gold Prices Eyeing Resistance at 1785 as Traders Await Jackson Hole

Gold Prices Eyeing Resistance at 1785 as Traders Await Jackson Hole

Margaret Yang, CFA, Former Strategist

GOLD PRICE OUTLOOK:

  • Gold prices ranged at around $1,785 for the past week, waiting for fresh catalysts
  • The Jackson Hole symposium will be closely eyed by bullion traders for clues about the Fed’s tapering timeline
  • Breaking above $1,785 may open the door for further gains, whereas a pullback may bring $1,750 into focus
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Gold held steadily during Monday’s APAC session as bullion traders awaited for the Jackson Hole symposium later this week. The latest FOMC meeting minutes signaled that a majority of Fed members support an idea to scale back the $120 billion per month in asset purchases by the end of this year. Fed Chair Jerome Powell’s speech on Friday may strengthen this prospect, although recent economic data has shown signs of a slowing recovery.

Against this backdrop, the DXY US Dollar index advanced to an eight-month high as market participants attempted to price in tightened liquidity conditions towards the end of the year. As a result, gold prices faced strong resistance to move up despite escalating geopolitical tensions in Afghanistan.

Gold Price vs. US Dollar IndexPast 12 Months

Source: Bloomberg, DailyFX

Looking ahead, traders are eyeing Friday’s UScore PCE inflation data for clues about rising price levels and their ramifications for the Fed policy. The figure is expected to hit 3.54% YoY in July, marking the highest level since 1992. A stronger-than-expected reading may strengthen the prospect for tapering and weigh on gold prices, whereas a weaker one may lead to the reverse.

Technically, gold prices are about to challenge an immediate resistance level at 1,785 – the 61.8% Fibonacci retracement. A failed attempt to breach 1,785 may lead to a pullback towards 1750 for immediate support. The MACD indicator is about to form a bullish crossover, suggesting that upward momentum may be building.

Gold - Daily Chart

Gold Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -1% 8% 1%
Weekly -12% 14% -8%
What does it mean for price action?
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--- Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Comments section below or @margaretyjy on Twitter

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

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