Gold prices rebounded on Wednesday, August 12, buoyed by bullish buying momentum and a moderate core inflation reading in the US for July, which eased pressure on the Federal Reserve to raise interest rates. Despite reclaiming the losses from Tuesday, the yellow metal formed a shooting star candlestick pattern, suggesting that the market is likely to oscillate in a high consolidation range or face renewed resistance at the upper Bollinger Band and the 200-day moving average, potentially leading to a pullback.
Consequently, a cautious approach towards the end of the week anticipates a sideways consolidation with a bias toward resistance and a potential retracement. In terms of pricing, gold opened the Asian session at $4,372.12 per ounce and initially dipped to a daily low of $4,362.40. It then trended higher, surging through volatile US trading to hit a session high of $4,440.90, before encountering resistance and retreating to close at $4,408.36. The day's trading range was $78.5, with a net gain of $36.24, representing a 0.83% increase.
Looking ahead to Thursday, August 13, gold opened weaker, but support from moving averages and buying interest, coupled with the overall July CPI data meeting expectations, which reduced the probability of a September rate hike, are limiting bearish pressure. Therefore, intraday trading is expected to remain range-bound. The market will digest further inflation data today, including the US July PPI month-over-month and year-over-year figures, which are expected to remain moderate. Additionally, the weekly initial jobless claims data for the week ending August 8 is anticipated to be supportive. As such, buying on dips is a viable intraday strategy. However, given the price action after the previous day's data release and the bearish divergence signaled on the 4-hour chart, a short-term approach could be to sell near the upper Bollinger Band target.
On the weekly chart, gold last week saw a strong rally, supported by the upward trend line following a period of consolidation. Prices are now trading above the 5-, 10-, and 60-week moving averages. The MACD histogram shows a continuous reduction in bearish momentum, while the KDJ indicator has formed a bullish crossover, suggesting further upside potential towards $4,500 or even $4,700. However, the market must now contend with resistance from the 30-week moving average and the upward trend channel, which poses a risk of a pullback. A breakout above these levels would significantly boost bullish momentum, whereas a failure could present a buying opportunity at support levels such as the 60-week or 100-week moving averages, favoring a long-term bullish outlook.
On the daily chart, gold has been steadily climbing after multiple touches of the upward trend line support, which formed a base for consolidation. It has now reached resistance from the downward trend channel, presenting a risk of a correction. However, the upward trend line support continues to suggest a long-term upward trajectory. Therefore, any pullback towards the trend line support should be viewed as another buying opportunity. Conversely, a decisive break above the $4,600 level would completely reverse the bearish pressure and pave the way for new highs. Below are the initial intraday support and resistance levels for reference. Actual entry and exit points will be based on real-time account notifications: For gold, support is seen near $4,380 and $4,360; resistance is located near $4,440 and $4,470. For silver, support is near $64.70 and $64.00; resistance is near $66.55 and $67.20. This information is for reference only and does not constitute investment advice. Investors should act at their own risk.
Comments