Market Analysis

While traders await the FOMC minutes, the price of gold maintains its range and rises above $2,500

Amos Simanungkalit · 21 Aug159.5K Views

The price of Gold (XAU/USD) continues its sideways consolidation above the $2,500 psychological level during the early European session on Wednesday, remaining close to the record high achieved the previous day. Market participants seem confident that the Federal Reserve (Fed) will initiate a policy easing cycle, potentially announcing a 25 basis point (bps) cut in September. This anticipation continues to weigh on US Treasury bond yields, providing crucial support to the non-yielding yellow metal. Additionally, ongoing geopolitical tensions, China's economic struggles, and a slight decline in global risk appetite serve as tailwinds for this safe-haven asset.

However, a modest recovery in the US Dollar (USD) from its lowest level since January, coupled with hopes for a ceasefire in Gaza, limits any significant upward movement for Gold. Investors also appear cautious, opting to stay on the sidelines ahead of the release of the July FOMC meeting minutes. Furthermore, Fed Chair Jerome Powell's upcoming speech at the Jackson Hole Symposium on Friday will be closely watched for insights into the US central bank's policy direction. This will play a crucial role in shaping USD price dynamics and determining the near-term trajectory for XAU/USD. Nonetheless, the overall fundamentals remain supportive of bullish sentiment.

Technical Analysis: Gold may attract dip-buying, with support near the $2,480 resistance turned support level.

Technically, last Friday's breakout above the triple top resistance in the $2,479-$2,480 range, followed by a move past the $2,500 psychological level, was viewed as a fresh catalyst for bullish traders. Furthermore, oscillators on the daily chart are comfortably in positive territory and not yet overbought, indicating that the path of least resistance for Gold remains to the upside.

As such, any significant pullback could be seen as a buying opportunity near the $2,500 mark, with support expected around the $2,480 level, which previously acted as resistance. Continued selling pressure could push XAU/USD towards the $2,455-$2,453 horizontal support area, with further declines possibly leading to the $2,430 region. A decisive break below this level could bring the metal down to the 50-day Simple Moving Average (SMA), currently positioned just below the $2,400 mark.