Overview and dynamics
Today, in anticipation of the speech the Federal Reserve’s Janet Yellen at the annual conference in Jackson Hole, trading activity on the currency market is low. Dollar is moderately declining against major rival currencies. XAU/USD pair found support at 1324.00 (EMA50 on the daily chart, Fibonacci level 38.2% of correction to the downward wave since October 2012). After reaching in early July of absolute year highs near the level $1375.00 per ounce, gold price has lost its active positive momentum.
A range was formed between the levels 1365.00 and 1315.00.
On the daily chart a new downward channel has formed with a slight angle, whose upper limit is at the moment near the level 1360.00.
After a series of statements by the Fed last week about a high probability of raising interest rates in the US until the end of the year, the market is now waiting for specific signals from Yellen.
The support level 1324.00 is quite strong. If J. Yellen hints at the possibility of a rate hike in September, the dollar will strengthen sharply on the currency market, including in XAU/USD pair.
Breakthrough of the level 1324.00 may continue with a decrease to the levels 1264.00 (EMA200 and the lower limit of the upward channel on the weekly chart), 1252.00 (EMA200 on the daily chart), 1218.00 (Fibonacci level 23.6%). Fixing of the price below 1218.00 will create preconditions for the further decrease of XAU/USD pair and the return to the global downtrend, which began in October 2012.
However, the risks of further strengthening of the gold price are also high. On the weekly chart XAU/USD pair remains within the ascending channel with the upper limit passing near the levels 1385.00 (2014 highs), 1410.00 (Fibonacci level 50.0% of correction to the downward wave since October 2012).
The probability of movement in either direction is estimated at this point as 50/50. Everything will depend on what Yellen says.
A break of the range above the levels 1365.00, 1385.00 creates risks of further gold price growth.
Support levels: 1324.00, 1316.00, 1300.00, 1264.00, 1244.00, 1218.00
Resistance Levels: 1365.00, 1385.00, 1400.00, 1410.00, 1435.00, 1500.00
Buy Stop 1342.00. Stop-Loss 1323.00. Targets 1365.00, 1385.00, 1400.00, 1410.00, 1435.00, 1500.00
Sell Stop 1315.00. Stop-Loss 1330.00. Targets 1300.00, 1264.00, 1240.00, 1218.00
Support at 1324.00
In the upward channel