Gold Technical Analysis – A very dovish Powell boosts the precious metal

Fundamental
Overview

Last Friday, Fed Chair
Powell delivered a more
dovish than expected speech at the Jackson Hole Symposium as he basically
kept the door open for a 50 bps cut at the September meeting. The line saying that
they will do everything they can to support a strong labour market was key.

That is a positive driver
for the precious metal as in the big picture, gold should remain supported as
real yields fall as we head into the Fed’s easing cycle, but in the short-term strong
US data might provide pullbacks along the way.

Gold
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that gold retested the broken resistance
turned support at the 2480 level and eventually extended the gains
following the dovish Powell’s speech.

The buyers remain in
control and should target a new all-time high. The sellers, on the other hand,
will want to see the price falling back below the 2480 level to invalidate the
breakout and position for a drop into the 2360 level.

Gold Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the bounce around the 2480 support
where we had also the confluence of the trendline.

The buyers will likely keep
on leaning on the trendline to position for new highs, while the sellers will
want to see the price breaking lower and below the support to regain control
and position for new lows.

Gold Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see that the price broke above the counter-trendline following Powell’s speech
and it’s now trading near a key minor resistance where the price got rejected
from several times.

The buyers will want to see
the price breaking higher to increase the bullish bets into new highs, while
the sellers will likely lean on it to position for a break below the support. The
red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the US Consumer Confidence report. On Thursday, we get the
latest US Jobless Claims figures. On Friday, we conclude with the US PCE
report.

See the video below

This article was written by Giuseppe Dellamotta at www.forexlive.com.