#Gold Technical Analysis# 24K99 News On Thursday (August 22), in the early European session, spot gold maintained an intraday decline, and the current price is near $2505 per ounce. FXStreet senior analyst Dhwani Mehta wrote on Thursday, analyzing the technical trends of gold price.
Mehta wrote that on Thursday morning, the gold price continued its corrective decline, once challenging $2500 per ounce. Before Fed Chairman Powell's speech on Friday, everyone's attention turned to the preliminary PMI data on Thursday.
Mehta pointed out that despite the pullback in gold price, the favorable technical trends in the daily chart may still lead to new highs in the future.
At 21:45 on Thursday Beijing time, S&P Global will release the U.S. Purchasing Managers' Index (PMI). It is expected that the preliminary PMI for the U.S. service industry in August will decrease slightly from 55 to 54. The preliminary PMI for U.S. manufacturing in August is expected to remain unchanged at 49.6.
Analysts pointed out that if the U.S. PMI data falls short of expectations, the dollar may come under pressure again, pushing the gold price higher.
Mehta stated that ahead of the release of the preliminary PMI data for the U.S., gold traders have been taking profits. The data, while waiting for Fed Chairman Powell's attendance at the Jackson Hole meeting on Friday, may bring new insights into the interest rate outlook for the Fed.
According to the 'Fed Watch' tool of the CME Group, the market currently expects a 35% chance of a 50 basis point rate cut by the Fed at the meeting on September 17-18, and a 65% chance of a 25 basis point rate cut.
Investors are also focused on other important U.S. economic data on Thursday. At 20:30 Beijing time on Thursday, the seasonally adjusted initial jobless claims for the week ending August 17th in the U.S. are expected to rise to 0.23 million, higher than the previous week's 0.227 million. At 22:00 Beijing time on Thursday, the seasonally adjusted existing home sales for July will be released, with an expected monthly rate increase of 0.3%.
Mehta said all eyes are still focused on Fed Chairman Powell's keynote speech on Friday in Jackson Hole, looking for any clues about the possible magnitude of rate cuts next month and whether there may be a possibility of reducing borrowing costs at subsequent policy meetings.
How to trade gold?
Mehta pointed out that the short-term technical outlook for gold prices remains constructive as the price of gold has broken through the symmetrical triangle and the 14-day relative strength index (RSI) is bullish, indicating that buyers are refusing to give up.
The 14-day RSI has declined slightly, but it is still well above the 50 level, currently close to 63, indicating that there is still a trading opportunity to "buy on dips" for gold prices.
Mehta said that if the momentum for gold prices to pull back strengthens, the recent support level is expected to be the Monday low of $2,486 per ounce. If the above support level is breached, the price of gold is expected to test the triangle resistance-turned-support level (now at $2,467 per ounce).
If gold continues to decline, the psychological support level of $2,450 per ounce will save the gold bulls.
(Spot gold daily chart source: FXStreet)
Mehta added that conversely, if gold buyers reclaim the record high of $2,532 per ounce, the next upward target is expected to be at $2,550 per ounce. Once the latter is breached, the price of gold may challenge the psychological level of $2,600 per ounce, and then proceed towards the triangle target of $2,660 per ounce.
At 16:09 Beijing time, spot gold was reported at $2,505.14 per ounce.