Golden technical forecast: neutral
- Gold prices take a strong step on Friday to break the resilience of the 1804-1808 zone.
- Another significant level of resistance lurks above 1844.
- Tthe analysis in the article is based on this pricing and chart formations. For more information on pricing actions or chart patterns, visit us DailyFX education section.
August is not quite over yet, but for gold it has been a significant trip. It was a little over three weeks ago when Gold crashed like a gear after a weekly opening, falling below the level of 1680, which now marks the low level of 2021. This step meant a loss of -7.3% since the opening in August and the support started immediately after the sale.
Since then, buyers have reclaimed all of these sales, with gold prices breaking a key zone of resistance this week. This zone runs from 1804 to 1808 and was shown as a grant at the beginning of the month. I looked at the area on Monday as price activity had just begun to resist the zone againsetting table bullish breakout potential. Chair Powell helped the rest, as Jackson Hole’s statement helped the bulls eventually ride over the area in the table.
Golden four-hour price chart
Sitting ahead of gold prices is another big level on the chart and it was a price that Gold could not break, despite two separate attempts in July and one in early August. It appears at 1834 and can be combined with the 1825 Fibonacci level to create a zone that is now very close.
The bigger question is whether the bulls will be able to cope in the last few months after three failed attempts. Probably some more USD weakness is needed and if we take down recent drivers, it is likely to get worse FOMC surprises. Next week, the report on non-farm payrolls is likely to be widely followed, given that Chair Powell continues to point to the job market as a reason to stay on the floor in accommodation. And expectations for next week are high as markets look for +728,000 jobs to increase the unemployment rate to 5.2% from the current 5.4%.
This can be a difficult scenario, given the continuing increase in the number of Covids due to the delta variant and the disappointing prints. NFP This can be seen as a driving force behind the weakness of the USD and potentially the strength of gold.
Golden daily price chart
Gold prices in the long run
Taking a step back to the weekly leaderboard and here is the rising scale. Of course, the key is buyers who will continue to take control again after a longer-term upward trend has receded more than a year ago. It was August 7thth last year, when gold prices reached an all-time high of 2075 and it was in this same weekly technical forecast that I warned against a withdrawal.
Well, that retreat turned into something more, and now, a year later, prices have returned to the psychological level of 2000. However, this retreat has taken the form of a bear channel and, when combined with the previous uptrend, forms a bull flag that can take a long time to approach. The bigger issue right now is timing, and it probably needs the help of the FOMC and the USD of gold prices to get back to this longer-term upward trend.
Gold weekly chart
– Written James Stanley, Senior strategist For DailyFX.com
Get in touch and follow James Twitter: @JStanleyFX