Gold prices paused in their rally ahead of key data and speeches at the Jackson Hole central banker symposium. Weak US data suggests a potential fall in US interest rates, which continues to support Gold. Technically, the XAU/USD pair has not yet reached its minimum upside target following a breakout from a range.
Gold continues to be broadly supported by negative US data as traders evaluate the outlook for the US economy. Interest rates tend to impact Gold prices, with the asset appreciating as rates fall due to lower opportunity costs. The release of the Federal Reserve’s July meeting minutes revealed a willingness to cut interest rates, with a majority seeing a cut as necessary in September. Expectations of a rate cut in September have solidified, with the possibility of a 0.50% cut increasing.
Recent data revisions by the US Bureau of Labour Statistics showed a downward revision in Nonfarm Payrolls data, indicating a weakening labor market. While the data isn’t recession-level, it adds pressure on US yields, the Dollar, and supports Gold prices. Global PMI data for August and Fed Chairman Jerome Powell’s speech at Jackson Hole are events to watch for further market guidance.
Technically, Gold continues to extend a shallow pullback after reaching all-time highs. The short-term trend remains bullish, favoring long positions. The breakout from a range on August 14 generated an upside target around $2,550, based on Fibonacci analysis. Gold’s overall uptrend on medium and long-term time frames also supports a bullish outlook.
The S&P Global Composite PMI, a leading indicator of US private business activity, will be released on Thursday. The index, which ranges from 0 to 100, signals expansion above 50 and contraction below 50. A higher reading indicates a bullish sign for the US Dollar, while a lower reading is bearish. With a consensus of 53.5 for the upcoming release, investors will monitor this data point for its potential impact on the market.
