Gold price is edging higher on the day as bulls were able to initiate a bounce off critical support levels on the XAUUSD chart. However, the bounce was not convincing, as price action for the day still trades below highs seen earlier in the week. This lack of a follow-through action may not be unconnected with Thursday’s Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium.
Gold price for the day found some fundamental support from some risk-off headlines: the continued increase in the number of new coronavirus cases in the worst-hit countries, pessimism surrounding the US-China trade deal, and the report of the firing of two missiles into the South China Sea by China, in what the SCMP is calling a “warning to the US”, all increased appeal for the yellow metal. However, this demand was not enough to prompt large-scale buying. The upside in the gold price was also tapered by the upbeat durable goods report, which led to some US Dollar demand.
Technical Outlook for Gold Price
The ascending trendline which I identified as potential support for gold price action came into play once again, providing the fulcrum for the bounce by today’s price candle on the XAUUSD daily chart. This line confirms the higher lows shown by gold prices. However, gold is also forming lower highs, and this is starting to compress price action as the uptrend stalls. Thus, a symmetrical triangle setup is starting to evolve on the daily chart.
If gold price eventually breaks below the 1918.68 horizontal support at the point where it interfaces with the ascending trendline, we could see a push towards the 1869.39 or even 1821.55 support targets. This, of course, presupposes that 1900.76 would give way as well. 1788.90 and 1762.51 can also not be ruled out as potential price targets.
On the flip side, gold price needs a bullish break above the all-time high of 2075.14 to re-establish the recovery push beyond the $2000 mark. 1980.74 is the first resistance to this move. Further resistance may be seen at the 2008.04 and 2050.00 (10 August high) price levels.
The FOMC Chair’s speech at the annual Jackson Hole symposium could deliver a significant fundamental jolt to this pairing. Hence, traders need to be alert as to the words Powell may use in describing the new Fed inflation targets (if any).