Gold prices have surged back to $2500/oz after a notable retracement during the US session on Thursday. This rebound can be attributed to a stronger US Dollar, rising US Yields, and potential profit taking ahead of Fed Chair Powell’s speech at the Jackson Hole Symposium. Market participants are eagerly awaiting Powell’s remarks to gauge the future direction of gold prices.
The market had high hopes that Powell would confirm September rate cuts, especially after a downward revision to US jobs data. Many believe that a rate cut in September is already priced in, leading to speculation about the impact of Powell’s speech. Despite the support for rate cuts from several Fed policymakers, Gold struggled in the US session, indicating that market expectations may have already factored in a September rate cut.
As Powell prepares to address the markets, there is apprehension regarding the potential impact of his speech. While volatility may still be a factor, it is unlikely that Powell’s remarks will significantly alter market direction. Attention will be drawn to any mention of a potential 50 bps cut in September, a possibility that was once favorably priced in by the markets. Currently, futures are pricing in nearly 100 bps of cuts through the end of 2024.
Technical Analysis
From a technical standpoint, the rebound in Gold during the European session has been impressive, with the precious metal surpassing the $2500/oz mark. The recent dip may have provided an opportunity for bulls to reload and for new investors to enter the market at more favorable prices. The recovery has been swift, especially as Powell is set to speak. Yesterday’s bearish engulfing candle found support at the key 2472 area before buyers stepped in.
Price Levels to Watch
As Gold continues to set all-time highs, identifying key levels has become challenging. Immediate resistance levels in the upcoming US session may be found at 2514 and 2531.66, the weekly high thus far. On the downside, support levels include 2484 and the key 2472 area. A move lower could prompt a retest of the 2450 support level.
The market eagerly awaits Powell’s speech to provide clarity on the future path of interest rates and its impact on Gold prices. While expectations for a September rate cut may already be priced in, any surprises in Powell’s remarks could still lead to market volatility. Investors will closely monitor key price levels and technical indicators to navigate the unpredictable nature of the market.