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Basic
To wrap up the week, let’s take a look back at the key market insights and data that have impacted gold prices and related assets over the past five days.
Despite the FOMC’s tough line at Jackson Hole this summer, gold closed the day. Despite the downtrend, it remained positive for the week and remains above recent resistance.
From August 21-25, gold’s performance was heavily influenced by the market’s perception of the Fed’s policy direction, more than any other week in 2023. This is attributed to the quiet summer period combined with the influential Jackson Hole Symposium. The most significant event was Friday when Jerome Powell spoke in Jackson and gave a negative view of gold. However, considering the week as a whole, it is important to consider trading activity prior to this address.
The Jackson Hole Symposium differs from regular FOMC meetings by including: Unpredictability. This uncertainty worked in favor of the gold market. While many expected the Fed to take a hawkish view, there were clear signs of hesitation in the market. This was evident in the weaker US dollar and lower US Treasury yields throughout the week, giving gold price more room to rise. By Thursday, gold’s value peaked around $1,915 and showed a significant upward trend.
Gold prices fell on Friday, affected by the Fed’s comments on inflation and other market reactions. Still, consistent gains since the beginning of the week softened the fall this fall, and gold settled around $1,913 an ounce.
Overall, it was a positive week for gold. The potential for further growth will be highlighted next week, especially as the August jobs report comes out.
This week’s gold market analysis:
On August 21, the price of gold plunged to a low of $1,913.60. However, the metal soon rallied and broke above its weekly average of $1926. This rapid turnaround has activated a buy signal. With this momentum, the market expected a target of $1,939 to $1,960 this week.
As the week progressed, the target of $1939 was achieved and gold reached a staggering peak of $1950.4 by 25th August. This change suggests that a market rebound has occurred.
Combined with the current trend and standard deviation, it suggests that gold could reach the 61.8% Fibonacci retracement level, known as the ‘golden ratio’. This sets a target target for gold near $1,981.
The move is consistent with the market’s respect for key Fibonacci levels, further highlighting the importance of the 61.8% mark in trading and analysis. Short-term trends in the gold price will be important to validate this forecast.
Let’s take a look at next week’s standard deviation report to see what short-term trading opportunities we can identify.
Gold: Weekly Standard Deviation Report
August 25, 2023 at 9:00 PM ET
summary
- The gold futures market is showing a mix of bearish trends and bullish price momentum.
- Traders advised to take profits during the consolidation between Buy 1 and Buy 2 levels and consider long positions with weekly reversal stops.
- Short position holders were advised to take profits in the 1919-1898 range, and long position holders were recommended to take profits in the 1958-1972 range.
Weekly Gold (TOS)
executive summary: The gold futures market has shown mixed trends this week, with bullish price momentum on one side of the bearish trend. This report outlines the impact of these indicators and provides recommended actions for traders.
Weekly Trend Momentum: The gold futures contract ended this week in 1940. Importantly, the market’s closing below his 9-day SMA in 1970 confirms the general bearish momentum of the week. Momentum will shift to neutral if the future ends above his 9-day SMA.
Weekly Price Momentum: Price momentum is clearly bullish, even though the trend momentum is tilted bearish. This is evident as the market closed above the VC Weekly Price Momentum Indicator set in 1935. If the market closes below the VC PMI, we would expect a move to neutral in terms of price momentum.
Weekly price indicator recommendations:
- Traders holding short positions are advised to consider taking profit during the correction between the Buy 1 and Buy 2 levels, specifically between 1919 and 1972.
- Those considering long positions are advised to employ weekly reversal stops. Additionally, the 1935 level should be established as a stop-close only with a Good Till Canceled (GTC) order.
- Long side traders are advised to consider taking profits when the market reaches the Sell 1 and Sell 2 levels in the 1956-1972 range in one week.
Cycle-based recommendations:
- Short Position Holders: It would be wise to consider taking profits in the 1919-1898 range.
- Long Position Holders: The recommended profit taking range is between 1958 and 1972.
In conclusion, traders should approach the market with a clear strategy based on the indicators and recommendations outlined. Regular monitoring of the gold futures market is essential to effectively navigate the dynamic nature of the gold futures market.
