August 26 Gold Analysis
The gold market is volatile but firm. Following yesterday's sharp rise, gold prices retreated slightly today, but are still holding key support levels. Spot gold is currently trading around $3,370 per ounce, down slightly from yesterday's two-week high of $3,378. Market forces are intertwined, and gold prices are expected to fluctuate around key technical levels in the short term, but the medium- to long-term bullish outlook remains unchanged.
Analysis of Influencing Factors
1. Fed Policy Expectations Dominate Market Sentiment
Federal Reserve Chairman Powell delivered a clear dovish signal at the Jackson Hole symposium, opening the door to a September rate cut. Powell focused on the "strange equilibrium" in the job market, noting that the simultaneous slowdown in labor supply and demand suggests accumulating downside risks. While he continued to warn of inflationary uncertainties, he explicitly stated that "a shift in the balance of risks may require a policy response."
This statement caused the market's probability of a 25 basis point rate cut in September to surge from 75% to 90%. Expectations for the cumulative rate cuts by year-end were also revised upward. Powell's speech placed the labor market at the center of policy decisions, downplaying the impact of recent higher-than-expected inflation data.
2. Political Pressure and Concerns About the Fed's Independence
It is worth noting that Powell's dovish stance may, in part, reflect political pressure. Given that US President Trump and the Treasury Secretary, among others, have strongly urged the Fed to cut interest rates significantly, Powell faces unprecedented pressure. Trump also reiterated his threat to fire Fed Governor Timothy Cook if she does not resign, raising concerns about the Fed's independence.
This political interference in the central bank has weakened market confidence in the US dollar as a reserve currency, becoming a key driver of the decline in the US dollar index and indirectly supporting gold prices.
3. Economic Data and Market Focus
Market focus has shifted to upcoming US economic data, which will have a significant impact on gold's short-term performance:
- Today: July durable goods orders data will be released. Following a sharp 9.3% drop in June, the market expects a further 4% drop. Positive data could boost the US dollar and weigh on gold prices.
- Thursday: Revised second-quarter GDP figures will be released, with the initial estimate of annual growth at 3%. Downward revisions are bearish for the dollar and supportive for gold, while upward revisions are the opposite.
- Friday: July's core PCE price index (the Fed's most closely watched inflation indicator) will be released. This data will directly impact the strength of expectations for a rate cut. A higher-than-expected reading will cast doubt on the urgency of rate cuts and weigh on gold prices; a lower-than-expected reading will reinforce expectations of easing and drive a rebound in gold prices.
4. The US Dollar and US Treasury Yields Decline
Following Powell's speech, the US dollar index fell sharply, 0.96%, to 97.66. US Treasury yields also fell across the board, with the two-year yield plummeting 10.2 basis points to 3.69% and the 10-year yield falling to around 4.259%. A steepening yield curve reduces the cost of holding gold, enhancing its appeal.
5. Geopolitical Risks Provide Support
Geopolitical tensions continue to provide safe-haven support for gold prices:
- Trade Tensions: Trump's tariff policy continues to escalate global trade tensions. The United States has imposed an additional 25% tariff on India, bringing the total tariff rate to 50%.
- Russia-Ukraine conflict: The escalating tensions have also provided some safe-haven support.
Trading Recommendations
- Aggressive investors: Initiate long positions in batches when gold prices fall back to the $3,360-3,368 support area, with a stop-loss below $3,350 and a target of $3,385-3,400.
- Conservative investors: Wait for gold prices to effectively break through $3,400 before entering long positions, or enter medium- to long-term long positions if they fall back to $3,340-3,350.
- Risk Management: Ensure stop-loss orders are set appropriately to avoid the risks associated with volatile market fluctuations around the release of data. Maintain position management during trading and avoid trading without risk management.
Trade with caution and manage risk effectively! Wish you good luck!
The gold market is volatile but firm. Following yesterday's sharp rise, gold prices retreated slightly today, but are still holding key support levels. Spot gold is currently trading around $3,370 per ounce, down slightly from yesterday's two-week high of $3,378. Market forces are intertwined, and gold prices are expected to fluctuate around key technical levels in the short term, but the medium- to long-term bullish outlook remains unchanged.
Analysis of Influencing Factors
1. Fed Policy Expectations Dominate Market Sentiment
Federal Reserve Chairman Powell delivered a clear dovish signal at the Jackson Hole symposium, opening the door to a September rate cut. Powell focused on the "strange equilibrium" in the job market, noting that the simultaneous slowdown in labor supply and demand suggests accumulating downside risks. While he continued to warn of inflationary uncertainties, he explicitly stated that "a shift in the balance of risks may require a policy response."
This statement caused the market's probability of a 25 basis point rate cut in September to surge from 75% to 90%. Expectations for the cumulative rate cuts by year-end were also revised upward. Powell's speech placed the labor market at the center of policy decisions, downplaying the impact of recent higher-than-expected inflation data.
2. Political Pressure and Concerns About the Fed's Independence
It is worth noting that Powell's dovish stance may, in part, reflect political pressure. Given that US President Trump and the Treasury Secretary, among others, have strongly urged the Fed to cut interest rates significantly, Powell faces unprecedented pressure. Trump also reiterated his threat to fire Fed Governor Timothy Cook if she does not resign, raising concerns about the Fed's independence.
This political interference in the central bank has weakened market confidence in the US dollar as a reserve currency, becoming a key driver of the decline in the US dollar index and indirectly supporting gold prices.
3. Economic Data and Market Focus
Market focus has shifted to upcoming US economic data, which will have a significant impact on gold's short-term performance:
- Today: July durable goods orders data will be released. Following a sharp 9.3% drop in June, the market expects a further 4% drop. Positive data could boost the US dollar and weigh on gold prices.
- Thursday: Revised second-quarter GDP figures will be released, with the initial estimate of annual growth at 3%. Downward revisions are bearish for the dollar and supportive for gold, while upward revisions are the opposite.
- Friday: July's core PCE price index (the Fed's most closely watched inflation indicator) will be released. This data will directly impact the strength of expectations for a rate cut. A higher-than-expected reading will cast doubt on the urgency of rate cuts and weigh on gold prices; a lower-than-expected reading will reinforce expectations of easing and drive a rebound in gold prices.
4. The US Dollar and US Treasury Yields Decline
Following Powell's speech, the US dollar index fell sharply, 0.96%, to 97.66. US Treasury yields also fell across the board, with the two-year yield plummeting 10.2 basis points to 3.69% and the 10-year yield falling to around 4.259%. A steepening yield curve reduces the cost of holding gold, enhancing its appeal.
5. Geopolitical Risks Provide Support
Geopolitical tensions continue to provide safe-haven support for gold prices:
- Trade Tensions: Trump's tariff policy continues to escalate global trade tensions. The United States has imposed an additional 25% tariff on India, bringing the total tariff rate to 50%.
- Russia-Ukraine conflict: The escalating tensions have also provided some safe-haven support.
Trading Recommendations
- Aggressive investors: Initiate long positions in batches when gold prices fall back to the $3,360-3,368 support area, with a stop-loss below $3,350 and a target of $3,385-3,400.
- Conservative investors: Wait for gold prices to effectively break through $3,400 before entering long positions, or enter medium- to long-term long positions if they fall back to $3,340-3,350.
- Risk Management: Ensure stop-loss orders are set appropriately to avoid the risks associated with volatile market fluctuations around the release of data. Maintain position management during trading and avoid trading without risk management.
Trade with caution and manage risk effectively! Wish you good luck!
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.