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are lower this week with the precious metal down 1.34% to trade at 1324 ahead of the New York close on Friday. The move comes on amid a fresh batch of central bank rhetoric with officials continuing to suggest that the door remains open for a September rate hike. Still, our outlook for gold remains unchanged with the technicals leaving room for a move lower before resumption of the broader uptrend.
Remarks made by Fed Chair at the Jackson Hole Economic Symposium on Friday fueled a sharp recovery in gold prices (which were at the weekly lows) as the she noted that the central bank remains on pace to begin normalization in the months ahead. The rally quickly faltered however as the U.S. Dollar strengthened and stocks softened. On balance, the comments saw little change in the outlook for interest rates with Fed Fund Futures still pricing the first material expectation for a rate hike to be in December (slight uptick in the probability post-Yellen).
The broader outlook remains unchanged from . We’ve been tracking the gold trade closely on SB Trade Desk and heading into next week the focus remains lower while below the monthly open / high-day close at . A descending pitchfork formation extending off the June highs has continued to guide price action with precision with prices looking to close the week just above the median-line.
Note that bullion is coming off long-term trendline resistance extending off the 2011 record highs and a break below the median-line targets subsequent support targets at and – are of interest for possible short-exhaustion / long-entries. From a trading standpoint, if we close the week just above support, look for a possible rebound early next week to fade with a move into structural support to offer more favorable entries. Ultimately we’re looking higher in gold with a breach above near-term downtrend resistance targeting . Continue to track this trade and more throughout the week on SB Trade Desk.
—Written by Michael Boutros, Currency Strategist with DailyFX
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