Gold continues to hold more rangebound but buyers may be tested post-Jackson Hole | investingLive

As mentioned since the start of the week here, gold continues to keep in a more consolidative mood in the big picture. And that continues to be the case in the past few days as well. In fact, price is near unchanged to when I wrote up the linked post on Monday so go figure. Market players are focusing on Jackson Hole this week but may still be left wanting unless Fed chair Powell offers some decisive comments later on, though unlikely.

For gold, that quite possibly means having to wait on more catalysts to impact broader market and dollar sentiment before being able to react. Since the end of May, price action has been consolidating even as the fundamentals continue to stay relatively supportive. I highlighted those factors in the linked post above.

The current predicament for gold is that regardless of what those factors may argue, the technical side of things is pointing to a stall in the upside momentum. And in fact, we’re nudging towards a key test on the charts with gold buyers already having to put up a defense since the end of July.

As the upside momentum stalls and we move towards more sideways price action, it is testing the resolve of buyers with the 100-day moving average (red line) being called into question. That level is seen at around $3,315 currently.

Again, as another reminder we haven’t seen gold firmly dip below the key level since October 2023. And that has largely reaffirmed the bullish momentum in the precious metal since last year.

As such, a technical break of the key level could trigger stops especially if it is accompanied by a break of the consolidation range above amid a further loss of buying appetite. As mentioned earlier this week:

“If there is a key break there, it could trigger technical stops on the way down and lead to a quick and sharp pullback in prices. The May lows around $3,120-54 will be a key line in the sand on any major retracement before talking about the 200-day moving average (blue line).”

So, therein lies the risk for gold prices regardless of how Jackson Hole might pan out. This will be something to consider especially if markets will have to wait two more weeks before feeding off the next US jobs data to manage the outlook heading into September.