Market Analysis

With a bullish bias, the price of gold continues its sideways consolidative motion around $2,500

Amos Simanungkalit · 19 Aug 2024150K Views

The Gold price (XAU/USD) remains under pressure during the early European session on Monday but manages to stay above the $2,500 level, remaining close to its record high. The growing belief that the Federal Reserve (Fed) will start cutting interest rates in September has led to a further decline in US Treasury bond yields. This development has weakened the US Dollar (USD) to its lowest point since January, providing support for the non-yielding yellow metal.

In addition, concerns about an escalation in geopolitical tensions in the Middle East and the ongoing Russia-Ukraine conflict help to limit the downside for this safe-haven asset. However, traders appear hesitant to make new investments in Gold, preferring to wait for clearer indications regarding the Fed's rate-cut plans. As a result, attention is focused on the upcoming release of the FOMC meeting minutes on Wednesday and Fed Chair Jerome Powell's speech at the Jackson Hole Symposium.

Technical Analysis: Gold price bulls are holding back below the all-time high of around $2,510, set on Friday
From a technical standpoint, Friday's breakout above the $2,470-$2,472 horizontal barrier and subsequent movement past the previous all-time high was seen as a bullish signal. Additionally, daily chart oscillators remain in positive territory and are not yet in the overbought zone, indicating that the Gold price is more likely to trend upward. However, the inability to sustain momentum above the $2,500 psychological level suggests caution for bullish traders. It may be wise to wait for consistent buying beyond Friday's all-time peak, around $2,509-$2,510, before expecting further gains.

Conversely, the $2,472-$2,470 resistance now appears to serve as immediate support. Any further decline is likely to attract fresh buyers and should be limited near the $2,448-$2,446 region. This area could act as a crucial pivot point for short-term traders; if it is decisively broken, it may lead to deeper losses. The Gold price could then see an accelerated decline toward the 50-day Simple Moving Average (SMA), currently near the $2,388-$2,387 zone, with some support likely around the $2,400 level.