GOLD PRICE TALKING POINTS
The price of gold is little changed from the start of the week as it quickly bounces back from a fresh monthly low ($1907), and current market trends may keep the precious metal afloat as the crowding behavior in the US Dollar persists in September.

GOLD PRICE TOUCHES 50-DAY SMA FOR FIRST TIME SINCE JUNE
The price of gold has touched the 50-Day SMA ($1912) for the first time since June as it trades within the August range, but the pullback from the record high ($2075) may prove to be an exhaustion in the bullish price action rather than a change in trend as bullion trades to fresh yearly highs during every single month so far in 2020, while the moving average continues to track the positive slope from earlier this year.

The limited reaction to the US Non-Farm Payrolls (NFP) report suggests the price of gold will continue to consolidate even though US traders come back online following the holiday weekend, and the precious metal may face range bound conditions ahead of the Federal Reserve interest rate on September 16 as the central bank prepares to release the updated Summary of Economic Projections (SEP).

It remains to be seen if the fresh forecasts will foreshadow a looming shift in the monetary policy outlook as the Federal Open Market Committee (FOMC) mulls an outcome-based approach versus a calendar-based forward guidance, but it appears as though the central bank will stick to the status quo ahead of the US election as Fed officials plan to “achieve inflation that averages 2 percent over time.”

In turn, the FOMC may continue to “increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace,” and more of the same from Chairman Jerome Powell and Co. may prop up gold prices as the Fed’s balance sheet climbs back above $7 trillion in August.

Until then, the price of gold may continue to consolidate as global equity prices come under pressure, with the NASDAQ 100 and S&P500 sitting at a precarious position, but the crowding behavior in the US Dollar may continue to coincide with the bullish behavior in gold as a bear-flag formation emerges in the DXY index.

Image of IG Client Sentiment
In fact, the IG Client Sentiment report continues to show retail traders net-long USD/CHF, USD/CAD and USD/JPY, while the crowd remains net-short AUD/USD, GBP/USD, EUR/USD and NZD/USD.

With that said, the pullback from the record high ($2075) may prove to be an exhaustion in the bullish trend rather than a change in market behavior as the low interest rate environment along with the ballooning central bank balance sheets heighten the appeal of gold as an alternative to fiat-currencies, and the Relative Strength Index (RSI) may help to validate the continuation pattern established in August if the indicator bounces back from its lowest reading since June.

The technical outlook for the price of gold remains constructive as it trades to fresh yearly highs during every single month so far in 2020, with the bullish behavior also taking shape in August as precious metal tagged a new 2020 high ($2075).
The price of gold cleared the previous record high recorded in September 2011 ($1921) even though the Relative Strength Index (RSI) failed to retain the upward from June, but the indicator registered a new extreme reading (88) for 2020 as the oscillator pushed into overbought territory for the third time this year.
In turn, therecent sell-signalin the RSI could be indicative of a potential exhaustion in the bullish behavior rather than a change in trend as it breaks out of the downward trend established in August, and the indicator may help to validate the wedge/triangle formation if the oscillator bounces back from its lowest reading since June.
Will keep a close eye on the RSI as it appears to have bottomed out in August, but need to see the oscillator to push towards overbought territory to indicate a bullish outlook, with a push above 70 likely to be accompanied by higher gold prices like the behavior seen in July.
Until then, the price of gold may continue to consolidate amid the string of failed attempt to close below $1907 (100% expansion) to $1920 (161.8% expansion), but need a closing price above the Fibonacci overlap around $1971 (100% expansion) to $1985 (261.8% expansion) to bring the $2016 (38.2% expansion) to $2025 (78.6% expansion) region back on the radar.
A break/close above the $2016 (38.2% expansion) to $2025 (78.6% expansion) region opens up the record high price ($2075), with the next area of interest coming in around $2064 (50% expansion) followed by $2092 (161.8% expansion).

 

GOLD PRICE FORECAST TALKING POINTS:
Gold prices closed the month of August with a Doji, likely disappointing to bulls that drove the bid to fresh all-time-highs in the first week of last month.
So far September has started out with a slide as Gold prices have reverted to a key area of chart support.
While last week’s comments from Chair Powell were seemingly supportive of both Gold strength and USD-weakness, both of those themes have remained on hold since. Will tomorrow’s NFP report spur Gold bulls into action?
To learn more about price action, check out our DailyFX Education section, where it’s taught amongst a host of other candlestick patterns and formations.
GOLD BULLS ON BREAK AS DIGESTION CONTINUES
This can change rather fast in global markets, especially when there’s a backdrop of a global pandemic and a ton of uncertainty. That uncertainty was working in Gold bulls’ favor as the door opened into August, with price action showing considerable strength in the first week of last month. But prices soon found sellers at a fresh all-time-high of 2075, after which the Daily chart put in a bearish engulfing pattern – and matters haven’t really been the same in Gold markets ever since.

That bearish engulfing pattern from three Fridays ago led into a precipitous decline in the opening days of the following week. Since then, Gold prices have largely digested that recent range with price action narrowing through the second-half of August.

Of interest in that theme was a big zone of support running from 1900-1920 that’s held multiple support tests around the lows. This morning saw yet another support test in that zone, and so far buyers have been able to hold the lows, getting an assist from a bullish trendline projection that can be found by connecting August 11th and 26th swing-lows.

Taking a step back on the chart highlights a symmetrical wedge formation that’s built in Gold prices during this recent round of digestion. The support side of that wedge, with an assist from the 1920 level that previously functioned as the all-time-high are helping to currently hold the lows.

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And this sets the stage for tomorrow’s NFP report. This is the first such release since Chair Powell’s comments at Jackson Hole, when the head of the FOMC placed even more emphasis on the employment side of the bank’s dual mandate. Complicating matters around tomorrow’s employment numbers is the potential for noise in the data, as a number of temporary hires to complete this year’s census is likely going to show in the numbers; further obscuring actual impact to the economy based on shifts in the employment market over the past month.

 

GOLD PRICE TALKING POINTS
The price of gold is little changed from the start of the week even though the Federal Reserve plans to “achieve inflation that averages 2 percent over time,” but the pullback from the record high ($2075) may prove to be an exhaustion in the bullish price action rather than a change in trend as the Relative Strength Index (RSI) appears to be bouncing back from its lowest reading since June.

GOLD PRICES TO WATCH AS RSI REBOUNDS FROM LOWEST READING SINCE JUNE
The price of gold continues to consolidate within the August range after marking the longest stretch of gains (nine consecutive weeks) since 2006, but a wedge/triangle formation may pan out in September as the Federal Reserve Economic Symposium offers little evidence of a looming change in the path for monetary policy.

It seems as though Fed officials will continue offer greater clarity surrounding the changes to the Statement on Longer-Run Goals and Monetary Policy Strategy as Governor Lael Brainard emphasizes that “FAIT (flexible average inflation targeting) means that appropriate monetary policy would likely aim to achieve inflation moderately above 2 percent for a time to compensate for a period, such as the present, when it has been persistently below 2 percent.”

The comments from Chairman Jerome Powell and Co. suggests the Federal Open Market Committee (FOMC) will stick to the status quo at the next interest rate decision on September 16, and it remains to be seen if the update to the US Non-Farm Payrolls (NFP) report will influence the monetary policy outlook as the economy is expected to add 1.4 million jobs in August.

Until then, the low interest rate environment along with the ballooning central bank balance sheets may continue to heighten the appeal of bullion as an alternative to fiat-currencies, and current market trends look poised to persist over the coming days as the crowding behavior in the US Dollar carries into September.

Image of IG Client Sentiment
The IG Client Sentiment report continues to show retail traders net-long USD/CHF, USD/CAD and USD/JPY, while the crowd remains net-short AUD/USD, NZD/USD, EUR/USD and GBP/USD even though the FOMC remains reluctant to scale back its emergency measures.

In turn, the ongoing tilt in retail sentiment may continue to coincide with the bullish behavior in gold as theDXY index is on the verge of breaking a key support zone, and the pullback from the record high ($2075) may prove to be an exhaustion in the bullish price action rather than a change in trend as bullion trades to fresh yearly highs during every single month so far in 2020.

With that said, a continuation price pattern appears to have taken shape as gold consolidates within the August range, and the Relative Strength Index (RSI) may help to validate the wedge/triangle formation as it breaks out of a downward trend and attempts to bounce back from its lowest reading since June.

The technical outlook for the price of gold remains constructive as it trades to fresh yearly highs during every single month so far in 2020, with the bullish behavior also taking shape in August as precious metal tagged a new 2020 high ($2075).
The price of gold cleared the previous record high recorded in September 2011 ($1921) even though the Relative Strength Index (RSI) failed to retain the upward from June, but the indicator registered a new extreme reading (88) for 2020 as the oscillator pushed into overbought territory for the third time this year.
In turn, therecent sell-signalin the RSI could be indicative of a potential exhaustion in the bullish behavior rather than a change in trend as it recovers from its lowest reading since June, and the indicator may help to validate the wedge/triangle formation as it breaks out of the downward trend established earlier this month.
Will keep a close eye on the RSI as it appears to have bottomed out in August, but need to see the oscillator to push towards overbought territory to indicate a bullish outlook, with a push above 70

GOLD PRICE TALKING POINTS
The price of gold attempts to break out last week’s range as the Federal Reserve Economic Symposium indicates more of the same regarding the monetary policy outlook, and the pullback from the record high ($2075) may prove to be an exhaustion in the bullish price action rather than a change in trend as a continuation pattern takes shape in August.

GOLD PRICE CONTINUATION PATTERN IN FOCUS FOLLOWING FED SYMPOSIUM
The price of gold consolidates within the monthly range after marking the longest stretch of gains (nine consecutive weeks) since 2006, but a wedge/triangle formation may unfold over the coming days as the Federal Reserve Economic Symposium indicates more of the same for the next interest rate decision on September 16.

Recent remarks from Chairman Jerome Powell suggest the Federal Open Market Committee (FOMC) will continue to utilize its emergency tools as the central bank plans to “achieve inflation that averages 2 percent over time,” and it seems as though the Fed will retain the current policy beyond the US election as the “new Statement on Longer-Run Goals and Monetary Policy Strategy conveys our continued strong commitment to achieving our goals, given the difficult challenges presented by the proximity of interest rates to the effective lower bound.”

It remains to be seen if the FOMC will change its tone ahead of 2021 as Chairman Powell and Co. discuss an outcome-based approach versus a calendar-based forward guidance for monetary policy, but current market trends look poised to persist in September as the central bank show little indications of scaling back its the emergency measures.

In turn, the macroeconomic environment may keep gold prices afloat as its trades to fresh yearly highs during every single month so far in 2020, and the net-long US Dollar bias from July looks poised to persist even though the DXY index is on the verge of breaking a key support zone.

The IG Client Sentiment report continues to show retail traders net-long USD/CHF, USD/CAD and USD/JPY, while the crowd remains net-short EUR/USD, NZD/USD, GBP/USD and AUD/USD. The ongoing tilt in retail sentiment may continue to coincide with the bullish behavior in gold as the FOMC remains reluctant to alter the forward guidance for monetary policy, and the low interest rate environment along with the ballooning central bank balance sheets may continue to heighten the appeal of bullion as an alternative to fiat-currencies as the Fed vows to “increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace.”

With that said, the pullback from the record high ($2075) may prove to be an exhaustion in the bullish behavior rather than a change in trend as the price of gold trades to fresh yearly highs during every single month so far in 2020, and a continuation pattern appears to be taking shape in August as the precious metal consolidates within the monthly range.

With that said, the pullback from the record high ($2075) may prove to be an exhaustion in the bullish behavior rather than a change in trend as a continuation pattern takes shape in August, and a wedge/triangle formation may pan out over the coming days as the price of gold trades to fresh yearly highs during every single month so far in 2020.

The technical outlook for the price of gold remains constructive as it trades to fresh yearly highs during every single month so far in 2020, with the bullish behavior also taking shape in August as precious metal tags a new 2020 high ($2075).
The price of gold cleared the previous record high recorded in September 2011 ($1921) even though the Relative Strength Index (RSI) failed to retain the upward from June, but the indicator registered a new extreme reading (88) for 2020 as the oscillator pushed into overbought territory for the third time this year.
In turn, therecent sell-signalin the RSI could be indicative of a potential exhaustion in the bullish behavior rather than a change in trend as it recovers from its lowest reading since June, and the indicator may help to validate the wedge/triangle formation as it breaks out of the downward trend established earlier this month.
The price of gold appears to be breaking out of a continuation pattern following the string of failed attempts to close below the $1907 (100% expansion) to $1920 (161.8% expansion), but need a close above the Fibonacci overlap around $1971 (100% expansion) to $1985 (261.8% expansion) to bring the $2025 (78.6% expansion) region back on the radar.
A break/close above $2025 (78.6% expansion) opens up the record high price ($2075), with the next area of interest coming in around $2092 (161.8% expansion).

XAU/USD ANALYSIS, GOLD PRICES, RNC LINEUP – TALKING POINTS
Gold prices are consolidating after spectacularly declining from over-2k peak
Last night of Republican National Convention will be critical: eyes on Trump
President will give speech outlining his vision for the country in a second term
67 DAYS UNTIL THE US PRESIDENTIAL ELECTION
The spread between President Donald Trump and Democratic nominee Joe Biden has narrowed as we head into the final day of the RNC. Polling data generally shows Mr. Biden in the lead, though the difference among various agencies ranges from as low as 1 point to as high as 9. RealClearPolitics general election polling data as of August 26 shows that the spread between Trump and Biden has narrowed to around 7 points.

DAY 3 RNC HIGHLIGHTS
Content in terms of economically-oriented policies was relatively sparse. As such, the market reaction appeared to be relatively muted. The speeches included talks about the riots from social unrest and the emphasis of a well-known Republican idea – going back to Richard Nixon – of law and order. The campaign then used that to shift the focus and narrative of a choice between prosperity and disorder, between Trump and Biden.

DAY 4 RNC LINEUP
The final night of the 4-day Republican National Convention will be closely scrutinized as Mr. Trump prepares to deliver his outlook for a second term. The lineup for the final day includes well-known figures like Senate Majority Leader Mitch McConnell, House Minority Leader Keven McCarthy, former New York city mayor Rudy Giuliani and the President himself.

Trump’s speech in particularly may add additional pressure to what is an already geopolitically-uncertain environment. Rhetoric on inward and outward-facing economic policy, particularly as it relates to cross-continental trade relations – may rattle markets. Tension with China remain high with the “Phase 1” trade deal check-in rescheduled indefinitely and uncertainty about the future use of auto tariffs against Europe.

This comes as the spread between Biden and Trump has been narrowing over the past few days. Concern about another four years of unconventional economic policies could spark demand for havens and push the US Dollar higher. Consequently, gold prices may turn lower on account of not only a strong Greenback but a quick burst of renewed demand for liquidity.

XAU/USD appears to be a consolidative process after rallying up a storm following its break above a critical inflection point at 1810.33. The symmetrical nature of this pattern may hint that a resumption of the prior uptrend is in play. Having said that, the layered shelves of resistance that have developed since topping at 2069.77 creates a new series of obstacles gold prices have to clear. A downside breakout is not improbable.

Gold Price Forecast: Once More, into the Jackson Hole Abyss – Levels for XAU/USD

 

 

GOLD PRICE FORECAST OVERVIEW:
Gold prices have not made much progress in the days ahead of the Jackson Hole Economic Policy Symposium.
It still holds that gold prices still have both fundamental (expansionary fiscal and monetary policies, producing negative real yields) and technical (triangle consolidation during an uptrend) tailwinds at their back.
According to theIG Client Sentiment Index, the gold price rally is not ready to resume.

 

 

GOLD PRICES COIL INTO TRIANGLE AMID UPTREND
Gold prices have made little progress in recent days, and really over the past two weeks, as traders await the Jackson Hole Economic Policy Symposium at the end of this week. Last week’s doji candle has been met by a doji/bullish hammer (depending upon perspective), suggesting that traders are not yet ready to throw in the towel on the explosive summer rally.

 

 

Even as the gold price rally has paused, it remains the case that gold prices still have both fundamental and technical tailwinds at their back. Thanks to expansionary monetary policy and thus far underwhelming fiscal policy responses, mixed with the global economic uncertainty brought about by the coronavirus pandemic, real yields continue to fall and remain depressed.

 

 

An environment defined by depressed and/or negative real yields has historically proven bullish for precious metals. With the Federal Reserve’s Jackson Hole Economic Policy Symposium coming over the next few days, a reminder of the dour economic conditions and the needed ongoing extraordinary monetary stimulus measures may draw interest back to precious metals, in particular gold prices.

 

 

GOLD VOLATILITY PULLING BACK, WEIGHING ON GOLD PRICES

Gold prices have a relationship with volatility unlike other asset classes. While other asset classes like bonds and stocks don’t like increased volatility – signaling greater uncertainty around cash flows, dividends, coupon payments, etc. – gold tends to benefit during periods of higher volatility. Heightened uncertainty in financial markets due to increasing macroeconomic tensions increases the safe haven appeal of gold.

 

 

GVZ (GOLD VOLATILITY) TECHNICAL ANALYSIS: DAILY PRICE CHART (OCTOBER 2008 TO AUGUST 2020) (CHART 1)
Gold Price Forecast: Once More, into the Jackson Hole Abyss – Levels for XAU/USD
Gold volatility has started to pullback to a more significant degree, and alongside a sideways move in gold prices, there has been a deterioration in short-term correlations. Gold volatility (as measured by the Cboe’s gold volatility ETF, GVZ, which tracks the 1-month implied volatility of gold as derived from the GLD option chain) is trading at 22.90. The 5-day correlation between GVZ and gold prices is 0.35 while the 20-day correlation is 0.22; one week ago, on August 19, the 5-day correlation was 0.31 and the 20-day correlation was 0.40.

 

 

Our longstanding axiom holds: “given the current environment, falling gold volatility is not necessarily a negative development for gold prices, whereas rising gold volatility has almost always proved bullish; in the same vein, gold volatility simply trending sideways is more positive than negative for gold prices.”

 

 

GOLD PRICE TECHNICAL ANALYSIS: DAILY CHART (AUGUST 2019 TO AUGUST 2020) (CHART 2)
Gold Price Forecast: Once More, into the Jackson Hole Abyss – Levels for XAU/USD
The volatility seen in gold prices throughout August may have yielded a consolidation in the form of a triangle, finding resistance from the August swing highs and support from the March, June, and August swing lows. Such an occurrence in context of the multi-month uptrend speaks to greater upside potential over the coming weeks.

 

 

It is important to note that the pullback in gold prices during August halted at two key levels: the rising trendline support from the March and June 2020 lows –the coronavirus pandemic trendline; and the former all-time high near 1921.07. The first test of support arrived as the daily candle carved out a doji; and the second test appeared as a hammer candle on the daily chart. Concurrently, these are signs that the all-time high is a significant zone of demand.

 

 

Gold Price Forecast: Once More, into the Jackson Hole Abyss – Levels for XAU/USD
“Gold prices have completed the inverse head and shoulders pattern first identified in mid-2019. Depending upon the placement of the neckline, the final upside target was 1820.99. The long-term gold thesis is now evolving, but with the bottoming effort completed, we can now turn our attention to all-time highs at 1921.07 – and well-beyond over the coming months.” Gold prices failing through the former yearly high at 1921.07 would be a major warning sign for gold bulls. A loss of the August low at 1862.90 would be a very important development insofar as redefining the recent consolidation as a topping effort rather than a bullish continuation effort.

 

 

Gold Price Forecast: Once More, into the Jackson Hole Abyss – Levels for XAU/USD
Gold: Retail trader data shows 78.53% of traders are net-long with the ratio of traders long to short at 3.66 to 1. The number of traders net-long is 2.34% lower than yesterday and 1.00% lower from last week, while the number of traders net-short is 5.08% lower than yesterday and 4.29% lower from last week.

 

 

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.

 

Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Gold-bearish contrarian trading bias.

 

 

 

 

GOLD PRICE EXTENDS LOWER, US DOLLAR REBOUNDS AFTER JULY 2020 FOMC MINUTES

XAU/USD price action spikes lower following the latest FOMC minutes release
Gold under pressure possibly owing to little appetite for yield curve control
Large-scale asset purchases officially part of the conventional monetary policy toolkit
Gold prices are sliding fast as traders react to July 2020 FOMC minutes that just crossed the wires. Fed officials discussed the potential use of yield curve control as a tool for conducting monetary policy, but details showed little appetite for this possible approach. A sharp rebound staged by the US Dollar in response to the FOMC minutes is likely exacerbating renewed XAU/USD weakness..

Gold price chart XAU USD FOMC Minutes July 2020 Reaction

The FOMC minutes noted that while yield curve caps, or targets, could be used as an effective tool, it was also stated that potential requirement for “very sizable amounts of government debt under certain circumstances could pose risks to the independence to the central bank.” Gold prices reacted negatively to the news seeing that yield curve control likely would have served as a bullish fundamental driver due to a fixed lid on Treasury rates. FOMC minutes also suggested that the Fed is growing less optimistic on a robust economic recovery during the second half of the year. Perhaps this explains the upbeat reaction by the US Dollar given its posturing as a top safe-haven currency.

That said, the FOMC minutes also noted how large-scale asset purchases “were effective in the wake of the previous recession” and thus becomes part of the monetary policy toolkit. Looking ahead, language hinted at a preference of forward-guidance. This brings the upcoming Jackson Hole Symposium front and center as a potential platform for the Federal Reserve to outline the path forward as the economy recovers from the coronavirus pandemic

GOLD PRICE TALKING POINTS
The price of gold appears to be staging a V-shape rebound as it attempts to get back above the psychologically important $2000 mark, and the Federal Open Market Committee (FOMC) Minutes may do little to derail the bullish price action as the crowding behavior in the US Dollar looks poised to persist.

GOLD PRICE STAGES V-SHAPE REBOUND WITH FEDERAL RESERVE MINUTES ON TAP
Prior to the pullback from the record high ($2075), the price of gold marked the longest stretch of gains since 2006 as it increased for nine consecutive weeks, and the macroeconomic backdrop may keep the precious metal afloat as it trades to fresh yearly highs during every single month so far in 2020.

As a result, the FOMC Minutes may fuel the rebound from the monthly low ($1863) as Chairman Jerome Powell and Co. remain “committed to using our full range of tools to support the economy,” and the statement may indicate more of the same for the next interest rate decision on September 16 as the committee shows little intentions of scaling back its non-standard measures.

It seems as though the FOMC is in no rush to alter the course for monetary policy as the central bank extends its lending facilities through the end of the year, and the low interest rate environment along with the ballooning central bank balance sheets may continue to act as a backstop for the price of gold as market participants look for an alternative to fiat-currencies.

Meanwhile, the net-long US Dollar bias from July looks poised to persist even though the DXY index trades to a fresh yearly low (92.13) in August, with the IG Client Sentiment report still showing retail traders net-long USD/CHF, USD/CAD and USD/JPY, while the crowd remains net-short GBP/USD, AUD/USD, EUR/USD and NZD/USD.

With that said, current market conditions keep the price of gold afloat as it trades to fresh yearly highs during every single month so far in 2020, and the pullback from the record high ($2075) may prove to be an exhaustion in the bullish behavior rather than a change in trend as the Relative Strength Index (RSI) recovers from its lowest reading since June.

The technical outlook for the price of gold remains constructive as it trades to fresh yearly highs during every single month so far in 2020, with the bullish behavior also taking shape in August as precious metal tags a new 2020 high ($2075).
The price of gold cleared the previous record high recorded in September 2011 ($1921) even though the Relative Strength Index (RSI) failed to retain the upward from June, but the indicator registered a new extreme reading (88) for 2020 as the oscillator pushed into overbought territory for the third time this year.
In turn, therecent sell-signalin the RSI could be indicative of a potential exhaustion in the bullish behavior rather than a change in trend as it recovers from its lowest reading since June.

Will keep a close eye on the RSI as it reverses course and approaches overbought territory, with a break above 70 likely to be accompanied by higher gold prices amid the behavior seen in July.

The V-shape rebound from the monthly low ($1863) may gather pace as the price of gold carves a series of higher highs and lows this week, but need a break/close above the $2025 (78.6% expansion) region to bring the record high ($2075) on the radar, with the next area of interest coming in around $2092 (161.8% expansion).