Gold continues to respect support and resistance

(August 3) Gold remains rangebound between two important Fibonacci retracement levels produced from the March 16 2020 low at $1,451/oz. and the August 6, 2020 high at $2,075/oz. Resistance at $1.837/oz. has held two recent breakout attempts while support at $1,764/oz. has been untroubled of late. Adding to the current stalemate, all three simple moving averages are now clustered together, giving little away as to the current sentiment in the market, while the CCI indicator is neutral. Inside this box, there is additional support around $1,785/oz. which is underpinning the short-term gold price. It will need a fundamental driver to break this current set up otherwise price action will remain constrained going into the summer lull.

The US dollar continues to tread water ahead of this Friday’s US jobs report, a monthly event that is closely watched by traders who continue to double guess the Fed’s next move. While the inflation outlook – transitory or not – has been the main driver of the US dollar over the last few months, Fed chair Powell recently reiterated the central bank’s dual mandate of inflation and jobs, bringing this month’s jobs report firmly into focus. Friday’s job’s release may well be the driver that gold needs to attempt a range breakout.

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