On Thursday, the bullion was down for three consecutive days, changing hands near 1,785 USD as sentiment worsened ahead of US data and Jay Powell’s critical speech.
US data likely ignored due to Jackson Hole buzz
Later today, US initial jobless claims are expected to remain near last week’s 348,000. However, continuing claims will most likely drop (i.e., improve) to 2.79 million.
Furthermore, the US GDP for the second quarter is due, and it is expected to rise slightly to 6.7% annualized, up from 6.5% in the previous quarter. The GDP price index will also be released and should show massive inflation of circa 6%.
Powell speaks tomorrow, but volatility will most likely rise today
After that, the focus of traders and investors will switch to the Jackson Hole Symposium, starting today, although only in a virtual regime. Volatility will indeed be elevated across the financial markets as many central bankers will hold speeches today and tomorrow . Jerome Powell is scheduled to speak on Friday.
“We expect that the Fed will announce tapering at the September FOMC meeting and that tapering will begin in Q4. We expect that tapering will be concluded in summer 2022 followed by a rate hike late 2022.”
For instance, the “official” consensus of market participants is that Jerome Powell will announce the plan to reduce asset purchases on Friday during his remarks. Still, the beginning is expected to start in November. Therefore, Danske Bank is one of the more hawkish forecasters heading into Friday’s Powell speech.
Should this hawkish surprise happen, the USD might start appreciating after September’s meeting, most likely sending precious metals further lower. On the other hand, if Jerome Powell fails to announce the plan to taper, we could see a massive squeeze in metals’ prices.
Technical situation points to further consolidation
Gold’s failure to defend the 1,800 USD threshold might cause some nerves among the bullish camp. However, despite the recent volatility (sell-offs and strong rallies), the price has not moved anywhere since the beginning of July, pointing to indecision in the market.
Additionally, the long-term trend appears unclear, too, as gold is at last summer levels near 1,780 USD.
The Jackson Hole’s outcome will influence short-term trading, and at this time, it is impossible to say what will happen. However, the 200-day moving average is seen near 1,810 USD, and it has been defended by bears, causing a more substantial sell-off recently. Thus, as long as the metal remains below the 200-DMA, the outlook favors selling rallies.
Another resistance is spotted near 1,830 USD, where gold has failed twice already. However, the medium-term trend could improve and turn cautiously bullish should the price rise above this level.
On the downside, the next demand zone could be located near the 1,775 USD, and if not held, further decline toward 1,750 – 1,760 USD seems likely.