XAU/USD To Stay In Consolidation Ahead Of Jackson Hole

1. XAU/USD To Stay In Consolidation
Ahead Of Jackson Hole

2. Points To Be Discussed Today:
• Gold As A Safe Heaven
• Gold Managed To Stay Resilient
• Gold Didn’t Have A Difficult Time
• The FOMC’s Minutes
• The US Dollar Index
• Gold Technical Outlook
• Gold Sentiment Poll

3. Gold As A Safe Heaven
• Gold recaptures its status as a safe
haven.
• XAU/USD is likely to continue to move
sideways between clearly defined
technical levels.
• Investors’ focus shifts to Chairman
Powell’s speech at Jackson Hole
Symposium

4. Gold Managed To Stay Resilient
• Despite the broad-based USD
strength, gold managed to stay resilient
throughout the week with the risk-averse market
environment allowing the precious metal to find
demand.
• After edging higher toward $1,800 during the
first half of the week, the XAU/USD pair edged
lower on Thursday and ended up closing the
week virtually unchanged a little above $1,780.

5. Gold Managed To Stay Resilient - I
• The disappointing data from China, which
showed that Retail Sales and Industrial
Production expanded at a softer pace than
expected in July, weighed on market sentiment at
the start of the week.
• Additionally, escalating geopolitical tensions
between the US and China alongside the
increasing number of coronavirus Delta variant
cases globally forced investors to seek refuge in
safe-haven assets.

6. Gold Didn’t Have A Difficult Time
• Although the USD outperformed its rivals on
Monday, gold didn’t have a difficult time
limiting its losses.
• On Tuesday, the US Census Bureau reported
that Retail Sales declined by 1.1% on a
monthly basis in July to $617.7 billion.
• With this print coming in worse than the
market expectation for a decrease of 0.3%, the
market mood remained sour.

7. Gold Didn’t Have A Difficult Time - I
• On a positive note, the Federal
Reserve’s monthly publication
showed that Industrial Production
rose by 0.9%, compared to analysts’
estimate of 0.4%, but this reading
failed to help the sentiment improve.

8. The FOMC’s Minutes
• On Wednesday, the FOMC’s minutes of its July
policy meeting revealed some policymakers
saw it appropriate to start preparing for asset
tapering soon.
• "A few participants expressed concerns that
maintaining highly accommodative financial
conditions might contribute to a further
buildup in risk to the financial system,” the
publication further read.

9. The US Dollar Index
• The initial market reaction caused the
greenback to weaken modestly against
its rivals.
• But the US Dollar Index (DXY) regained
its traction on the Fed’s policy tightening
prospects and extended its rally to a
fresh 2021 high of 93.72 on Friday.

10. The US Dollar Index-I
• The US Department of Labor announced on
Thursday that the Initial Jobless Claims fell to
the lowest level since March 2020 at 348,000.
• Nevertheless, this data was largely ignored by
market participants.
• In the absence of high-tier data releases on
Friday, the DXY staged a correction to mid-93s
but rose more than 1% for the week.

11. The US Dollar Index- II
• IHS Markit will release the preliminary August
Manufacturing and Services PMI reports for
Germany, the euro area and the US on Monday.
• Investors expect the economic activity in the US
manufacturing and service sectors to continue to
expand at a robust pace but they will be paying
close attention to underlying details on input
price pressures.
• In case those reports confirm that inflation will
remain high for longer than expected, the USD
could preserve its firm footing.

12. The US Bureau Of Economic Analysis
• On Wednesday, July Durable Goods Orders
data from the US will be looked upon for fresh
impetus ahead of Thursday’s weekly Initial
Jobless Claims report.
• Additionally, the US Bureau of Economic
Analysis will release its second estimate of the
second-quarter GDP growth, which is unlikely
to receive a noticeable market reaction.

13. The Personal Consumption
Expenditures (PCE)
• Finally, the Personal Consumption
Expenditures (PCE) Price Index, the Fed’s
preferred gauge of inflation, will be featured
in the US economic docket.
• On a yearly basis, the Core PCE Price Index,
which excludes volatile food and energy
prices, is forecast to inch higher to 3.6% in July
from 3.5% in June.

14. The Personal Consumption
Expenditures (PCE) - I
• More importantly, FOMC Chairman Jerome
Powell will deliver his prepared speech at
the Jackson Hole Symposium at 1400 GMT,
suggesting that the market reaction to the PCE
inflation report is likely to remain short-lived.
• Investors will look for fresh clues regarding the
timing of the beginning of reductions in the
Fed’s asset purchases.

15. Bearish Pressure And Fuel A Rally In
XAU/USD
• Currently, markets seem to have already priced in
the expectations of tapering before the end of
the year.
• In case Powell adopts a cautious tone and
reassures markets that the dovish outlook will
remain intact for the rest of the year, the USD
could come under strong bearish pressure and
fuel a rally in XAU/USD.
• On the other hand, the pair’s downside could
remain limited even if Powell refrains from
changing the perception on the policy outlook.

16. Gold Technical Outlook
• The Relative Strength Index (RSI) indicator on
the daily chart continues to move sideways
near 50, confirming gold’s indecisiveness in
the short-term.
• On the upside, interim resistance seems to
have formed at the $1,790/93 area (static
level, 50-day SMA).

17. Gold Technical Outlook - I
• A daily close above this level could open the door
for additional gains toward $1,800 (psychological
level) and $1,810 (100-day SMA, 200-day SMA).
• On the downside, static supports are located at
$1,770, $1,760 and $1,750. Among these levels,
the second one seems to be particularly
significant with gold having suffered heavy losses
the last time it broke below it on August 9.

18. Gold Technical Outlook - II

19. Gold Sentiment Poll
• The FXStreet Forecast Poll confirms gold’s
near-term neutral outlook with the one week
view pointing to an average target of $1,779.
• Despite the fact that 57% of experts are
bullish in the one month view, compared to
29% bearish, the average target of $1,790
suggests that the beginning of an uptrend is
unlikely.

20. XAU/USD To Stay In Consolidation
Ahead Of Jackson Hole

21. THANKS FOR LISTENING
XAU/USD To Stay In Consolidation
Ahead Of Jackson Hole