On Thursday, the U.S. Consumer Price Index (CPI) data released earlier and the July CPI report this week both showed a cooling in inflation. Additionally, the disappointing July nonfarm payrolls data weakened the urgency for the Federal Reserve to raise interest rates in the near term, undermining expectations of further rate hikes. This has strengthened market bets that the Fed will hold steady in September, providing significant support for gold. However, the ongoing tensions in the Middle East, with the Hormuz and Bab el-Mandeb straits nearly at a standstill, have fueled expectations that disruptions to energy supplies could push inflation higher. This has sparked concerns about further rate increases, capping gold's short-term upside. The combined effect of these factors has led to a weakening of gold's upward momentum, keeping it in a high-range consolidation.
On Thursday, the European session saw gold stabilize and rebound, but it faced resistance at the $2,400 integer level. After the U.S. market opened, the price made multiple attempts, peaking at $2,401 before retreating. It then pulled back, falling to a low of $2,343 before the close. On Friday, gold opened at $2,364, encountered resistance, and then declined, hitting a low of $2,310. After several tests of this level, it found support and rebounded during the European session, reaching resistance at $2,358. It is currently trading around $2,353.
Where to Begin
On the daily chart, gold has encountered resistance at its highs, slowing its upward momentum and remaining in a high-range consolidation. Key support can be identified at the intraday low of $2,310, which gold tested multiple times during its decline and found support, near the Monday low. On the upside, resistance is at the intraday high of $2,364; a break above this level could target the $2,400 integer mark, which gold tested multiple times during the Thursday European and U.S. sessions before encountering resistance, followed by the weekly high of $2,450. The 5-day moving average has flattened significantly, the MACD indicator is also flattening, the RSI is turning lower from its bullish crossover, and the KDJ indicator is also turning lower, with a potential bearish crossover forming. The short-term technical picture shows that after repeated resistance at the highs, gold's upward momentum has weakened, pointing to a need for continued consolidation.
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Gold's intraday outlook: Weak U.S. employment data and cooling inflation provide significant support for gold. However, expectations that disruptions to Middle East energy supplies could push inflation higher have sparked concerns about further rate increases, limiting gold's short-term upside. The combined effect of these factors keeps gold in a high-range consolidation. The recommended approach is to treat the market as range-bound, with support at $2,310 and resistance at $2,364. A break above could target $2,400 and $2,450.