The Gold Spots (XAUUSD) remained below the $1,920/ounce mark on Friday, staying close to the one-month low reached in the previous session as markets remained cautious over the Fed’s possible monetary policy path following the latest economic releases.
The July US CPI numbers were cooler than expected, backing the current trend of disinflation in the US economy and solidifying bets that the Federal Reserve will refrain from raising its funds’ rate in its upcoming September meeting. Bets of a less hawkish Fed initially weakened the US dollar, boosting the demand for the non-yielding bullion.
However, Fed officials signalled that there is still more work to do to bring inflation down, stoking fears that the current terminal rate will be maintained for longer than previously expected, boosting the greenback during the session and helping the safe-haven asset relinquish some of its gains in the Thursday session. The precious yellow metal closed the Thursday session 0.13% lower and is on course for a third consecutive session of losses.
Technical
The 4H chart shows that gold prices are currently under short-term bearish pressure, with the price action trading below both the 50-EMA and the daily pivot point, which could act as barriers should the price action attempt to push higher. Therefore, sustained pressure could offer short-term trading opportunities as the price action moves towards the $1,910.77/ounce and $1,902.55/ounce support levels.
However, the appearance of the falling wedge could suggest a potential for a breakout to the upside. If the bulls can push gold prices above the daily pivot point and the 23.60% Fibonacci retracement level, this could lead to a short-term rally towards the $1,924.06/ounce resistance level. A push above the level, on significant volume, would leave the $1,933.11/ounce resistance level, corresponding to the 61.80% Fibonacci retracement level, as the next target in the short term.
Summary
Overall, the short-term momentum in gold prices is bearish, but the falling wedge pattern suggests that there could be a short-term rally in the near future.
Sources: TradingView, Trading Economics, Reuters.
