Gold (XAUUSD) has shown bullish signs of recovery and has reclaimed its bullish momentum for three consecutive days. The bulls have struggled to keep the price above the significant support at $1742 after retesting a month’s lowest support on Monday at $1728.3. Gold posted a new high on Thursday at $1761.52 during the Asian trading session. The gradual easing of the dollar index (USDX) to 108.46 after hitting 109.23 this week has allowed gold to recover.
The Jackson Hole Symposium is an economic summit attended by various countries' central bankers, academics, finance ministers, and other critical financial market movers worldwide. During this meeting, policymakers will have to discuss their plans and targets for fighting inflation and pushing the economy forward. The preceding discussion for this year’s Symposium will be on how to combat rising inflation.
Here, traders will have to pay great attention to the decisions of each country's policymakers on fighting inflation, which will determine whether they will continue hiking their interest rates after the symposium.
The theme of this year's symposium is "Reassessing Constraints on the Economy and Policy."
The most significant concern for gold traders during this symposium is the keynote speech to be presented by Fed Chair Jerome Powell tomorrow.
Here, investors will be anxious to decipher from Powell's speech if the Fed is still hawkish towards their monetary policy of hiking the interest rate gradually; it will further clamp down on gold prices.
The position maintained by Powell and other members of the Fed reserve present at this symposium will largely determine the fate of gold prices for the rest of the month.
On the contrary, Powell sounds dovish in his remarks, emphasising the need to slow down on the aggressive interest rate hikes; gold prices can expect more bullish momentum.
Before Powell's speech, another critical factor influencing gold prices today is the US prelim GDP q/q report to be released tonight. The outcome of the GDP report will have so much influence on the strength of the US dollar, which will influence gold prices. A higher reading from the US GDP report will strengthen the US dollar and weaken gold, while a lower reading from the US GDP report will favour the current bullish trend for gold. The forecast for this data is -0.7%, while the previous record was -0.9%.
To accompany the GDP q/q report is the Prelim GDP price index q/q. This data measures the annualised change in the prices of all the goods and services included in the GDP report. This report is significant as it could predict US annualised inflation from the GDP reading. This report is forecasted to remain the same as its previous record of 8.7%.
Above all, the US Jobless Claims report will be a third factor influencing the gold bullish trend today. The reading from this report is critical to investors as lower jobless claims will question the labour market’s capacity to withstand further aggressive interest rate hikes without falling into recession. This might force the Fed to keep on tightening its monetary policy gradually.
With this in mind, higher readings from the jobless claims report will favour the gold bullish trend and weaken the US dollar, while a lower reading will be a boon for the US dollar and weaken gold. The forecast for this data is the same as its previous record, given as 250K.
A forecast for gold prices ahead of the Jackson Hole Symposium
Gold is facing strong resistance at $1767.74 during the Asian session today. A break above this resistance will trigger more upside movement for gold, with the target at $1772.30. The next level to expect if the price closes above this resistance is $1777.12.
On the contrary, if gold prices were rejected at the current resistance of $1767.74, we could expect a retest of the support at $1750. A break below this level will give way to $1747 or $1740. Should these two minor support levels fail to hold after Powell's speech tomorrow, we can expect more downside with the target at $1731.