Lemon_tm
basic knowledge
As a wrap-up for the week, let’s review the key market insights and data that have impacted the price of gold and related assets over the past five days.
Gold closed higher despite a hawkish stance from the FOMC this summer in Jackson Hole Down, but still in a positive weekly trend, holding above near-term resistance.
More than any other week in 2023, gold moves will be influenced by market views on the Fed’s policy direction between Aug. 21 and 25. This is due to the quiet summer period and the influential Jackson Hole Symposium. The most pivotal event was Friday, when Jerome Powell spoke in Jackson and offered a negative view for gold. However, given the overall picture of the week, it is crucial to consider the trading activity ahead of this speech.
The Jackson Hole Symposium differed from regular FOMC meetings in that it included the following: Unpredictability. This uncertainty is good for the gold market. Many had expected a hawkish tone from the Fed, but the market showed clear signs of hesitation. That’s seen in a weaker dollar and lower U.S. Treasury yields this week, providing room for gold to rise. Gold prices peaked near $1,915 by Thursday, marking a notable uptrend.
Gold prices fell on Friday on the back of the Fed’s inflation comments and other market reactions. However, sustained gains earlier in the week have cushioned losses for the year, with gold holding steady around $1,913 an ounce.
Overall, it’s been a positive week for gold. The potential for further growth will be closely watched next week, especially the upcoming August jobs report.
This week’s gold market analysis:
On August 21, the price of gold fell, reaching as low as $1913.60. However, gold prices quickly rebounded, breaking the weekly moving average of $1926. This quick transition activated a buy signal. With this momentum, the market expects a target range of $1939 to $1960 this week.
As the week progressed, the $1939 target was achieved and gold prices peaked at an impressive $1950.4 on 25 August. This shift suggests that the market has reversed.
The current trend, combined with the standard deviation, suggests that gold has the potential to reach the 61.8% Fibonacci retracement level, often referred to as the “golden ratio.” This puts the expected target for gold at around $1981.
The move is in line with the market’s respect for key Fibonacci levels, further emphasizing the importance of the 61.8% mark in trading and analysis. The near-term behavior of gold prices will be crucial in validating this forecast.
Let’s take a look at next week’s Standard Deviation report to see what short-term trading opportunities we can spot:
Gold: Weekly Standard Deviation Report
August. 25/25/2023 at 9:00 PM EST
summarize
- The gold futures market has been mixed, with bearish trend momentum and bullish price momentum.
- Traders recommend buying profit-taking during the correction between the 1 and 2 levels and considering weekly reversal stops for long positions.
- The recommended profit-taking period for short positions is from 1919 to 1898, and the recommended profit-taking period for long positions is from 1958 to 1972.
Weekly Gold (TOS)
executive Summary: The trend of the gold futures market this week is complicated, the trend is bearish, but the price is bullish. This report outlines the impact of these indicators and provides traders with suggested actions.
Weekly Trend Momentum: The gold futures contract closed at 1940 points this week. Notably, the market closed below the 9-day moving average at 1970, confirming the prevailing bearish momentum for the week. A futures close above the 9-day moving average would turn momentum to neutral.
Weekly Price Momentum: While trend momentum is bearish, price momentum is clearly bullish. This is evident from the market closing above the VC weekly price momentum indicator set in 1935. If the market closes below the VC PMI, we expect price momentum to turn neutral.
Weekly price indicator recommendations:
- Traders with short positions are advised to consider buying profits during the correction between the 1 and 2 levels (specifically 1919 to 1972).
- For those considering taking a long position, we encourage them to use a weekly reversal stop. Also, the 1935 level should be set for stop-only and good-till-cancellation (GTC) orders.
- Long traders are advised to consider taking profits when the market reaches sell 1 and 2 levels (this week’s range between 1956 and 1972).
Cycle-based recommendations:
- Short position holders: be cautious about taking profits in the 1919-1898 period.
- Bulls: 1958-1972 recommended period for profit-taking.
In conclusion, traders should enter the market with a clear strategy based on the indicators and recommendations outlined. Regular monitoring of the gold futures market is critical to effectively navigating its dynamic nature.
