Gold Breaks Below $1,730 – Bears Take Control


The price of gold is showing a more cautious decline after hitting a new monthly low of $1,723.44 during the Tokyo session. As the Federal Reserve (Fed) chose price stability over growth at Friday’s Jackson Hole economic symposium, the precious metal XAU/USD is expected to remain in a downtrend for an extended period.

Inflationary pressures showed evidence that the Fed had limited luxury to slow the pace of interest rate hikes in August. At the same time, US economic activity has slowed significantly due to reduced economic liquidity. Given the dual situation, market watchers predicted that the Fed would slow the pace of interest rate hikes to stimulate economic activity. However, the Fed has chosen price stability as its primary objective. US non-farm payrolls (NFP) numbers will be critical going forward.

The economic data is expected to come in at 290,000, which is lower than the previous report of 528,000. Investors should not worry about reduced job creation. Since the US economy has been at full employment for about six months, additional opportunities for job growth have been significantly reduced.


Gold Technical Outlook

Gold failed to hold its gains and broke below 1750, opening the door for further losses to the 1730 support level, should it stay below 1760.

A clean break below the 5-week-old ascending trendline leads the XAU/USD bears towards the horizontal range, including various levels marked since mid-July around $1,715-12.

However, RSI conditions may test the further decline of the XAU/USD pair past $1,712. Otherwise, the $1,700 level may appear to be the last line of defense for the bulls before marking the yearly low near $1,680.

Today’s trading range should be between 1740 support and 1760 resistance.

The trend expected today is bearish.


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