On August 20, gold prices experienced a significant rally. During the Asian session, prices fluctuated modestly, holding above the $4,330 level. However, as the US session began, the metal pushed higher, breaking through the $4,400 and $4,500 barriers consecutively, ultimately reaching a high of $4,524 before settling at $4,522, with the daily chart closing as a large bullish candle.
Thursday's (August 20) minutes addressed the market's most pressing questions. Regarding the rate-hike divergence, several participants were willing to raise rates at the July meeting, but the decision was ultimately to hold steady. This is a critical signal that there is clear internal disagreement within the Fed about whether to continue hiking. According to CME pricing, the probability of holding rates steady in September stands at 67.3%, while the odds of a 25-basis-point hike are 32.7%, a notable cooldown from the previous 82% pricing for a hike.
The conclusion is that the minutes were not more hawkish than expected, and gold rose rather than fell. This suggests that the current bond and dollar dynamics are outweighing the Fed's rhetoric.
From a technical perspective, gold's early pullback this morning indicates that Asian sentiment does not fully endorse the overnight surge. Unless fresh fundamental catalysts emerge during the European and US sessions, gold's upward extension during the day may be limited, and a technical correction is possible. On the downside, support can be observed near $4,470, with the next level at $4,450. Predicting the upside is challenging, as the overnight impact of news-driven moves is difficult to quantify, and after surpassing technical levels, short-term sentiment tends to dominate, making technical projections less reliable.
In summary, with the minutes now out of the way, the next key marker is the Jackson Hole symposium next Friday. For the remainder of this week, range-bound trading is the most likely scenario. The probability of another rally today is low, with a higher chance of a pullback and consolidation. That said, traders should keep positions light and patiently await clearer signals.
For intraday trading, the recommendation is to go short on gold at $4,500-4,505, with a stop-loss at $4,515, targeting $4,420-4,400, and holding if the break is sustained.
Key economic data and events to watch today, Thursday, August 20: at 20:30, US initial jobless claims for the week ending August 15; at 20:30, US Philadelphia Fed manufacturing index for August; at 22:00, US Conference Board leading index for July (monthly change); and at 23:10, an interview with Fed's Musalem.
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