Gold on hold: The gold market is paused this week awaiting news from the Federal Reserve Bank meeting at Jackson Hole.
Tight trading range: The US dollar gold price has been stuck in a tight trading range in the lead up to Jackson Hole, a range of US$33, giving us a tight ‘low-high’ of US$1,776 to US$1,809.
For now, we wait: Any short-term technical analysis provided today will quickly be made redundant by tomorrow morning.
- What we can see however, is that XAUUSD (above) has reasonable support at US$1,780 (rectangle), reiterating last week’s point that this is the floor for this price cycle.
- A symmetrical triangle pattern is revealing itself. This could force a consolidation of the gold price until a catalyst causes it to break out.
Bullish view - indecision is your advantage: From one gold bull to another, it’s hard to not to get excited about gold under US$1,800. Some of our clients are. We’ve seen many investors this week take advantage of gold ‘stuck’ under this level as a reason to increase their gold position.
- Experienced gold investors are using this opportunity to ‘average in’ their positions. That is, even if the price does dip in the short term, they are prioritising their long term goal of wealth accumulation over short term volatility.
Bearish take - under pressure or profit taking? Keep your eye on managed money positions over the next couple of weeks. Gold held by exchange traded funds (ETFs) have declined in the past ten days.
- Some 610,000 troy ounces (toz) of gold have been sold since then. This exit happened as the gold price has regained most of its losses since the flash crash. Not ominous, but potentially profit taking ahead of Jackson Hole.
For Australians: Locally, we have a ‘bad news is good news’ situation. Last week’s currency weakness has eased, and the Aussie dollar has moved higher to US 72.38 cents.
This has capped the Aussie dollar gold price rally, and as you can see below, Aussie dollar gold has met resistance at the 61.8% Fibonacci level, though there is good support at the 50% retracement level. Overall, the Aussie dollar gold price looks to be continuing its long term uptrend.