Gold demonstrated resilience last week, closing with a long lower shadow on the weekly candlestick, a sign of persistent buying pressure. This strength was driven by cooling US economic data, expectations of a Federal Reserve policy shift toward rate cuts, and escalating geopolitical tensions in the Middle East. While bullish sentiment has clearly intensified, the market's trajectory remains highly dependent on changes in expectations for Fed rate hikes. The key event this week will be the release of the Federal Reserve's July meeting minutes, with other economic data being of secondary importance.
On Monday, the situation in the Strait of Hormuz remains largely unchanged. Reports of another ship attack over the weekend keep oil prices elevated, while US-Iran negotiations remain deadlocked. Geopolitical risk acts as a safety net for gold prices, providing support but not serving as a catalyst for a major breakout. It can prevent a sharp decline, but pushing prices to the 4500 level will require a genuinely breakthrough development.
The real focus this week is the release of the Fed's July meeting minutes on Wednesday, August 19. This will be the first opportunity for the market to see the internal discussions within the FOMC since the appointment of the new Fed chair. The minutes will reveal how concerned officials are about inflation, the extent of their disagreement on rate hikes, and their thinking on the September meeting. If the minutes show a growing divide on the need for further rate increases, the probability of a September rate hike could fall below 30%, which would be positive for gold. Conversely, if the minutes reveal a strong hawkish tone, rate hike expectations could rebound, putting near-term pressure on gold prices.
From a technical perspective, the sharp rally in late trading on Friday and Monday's Asian session, driven by sentiment, saw gold push above the 20-hour moving average at 4370. However, the rally stalled near 4416. While the overall structure remains bullish, the lack of sustained momentum suggests the market needs an external catalyst, likely from Fed-related news, to drive further gains. For the day, gold is expected to trade in a choppy, elevated range. Near-term resistance is at the hourly range top around 4410, with stronger resistance at the weekly high near 4440. Support is seen at the hourly moving average zone of 4380-4370, with a key floor at the lower end of the hourly range between 4330-4320.
In summary, gold is at a critical juncture, like a clim pausing on a flat section halfway up a mountain. It can consolidate here or retreat slightly before resuming its ascent. Traders should avoid making binary decisions based on a single candle. Instead, treat the 4400 level as a key pivot point and 4380 as a test of strength. The key to survival in this environment is not perfect prediction, but the discipline to cut losses at critical levels and the conviction to ride winning trades. The recommended strategy for the day is to sell gold at 4398-4400, with a stop-loss at 4410, targeting a drop to 4330-4220. If the price breaks and holds above 4410, the short position should be abandoned, and a long position can be initiated, aiming for higher levels.
Key economic data and events to watch on Monday, August 17, 2026: 8:30 PM ET (20:30) - US August Empire State Manufacturing Index; 10:00 PM ET (22:00) - US August NAHB Housing Market Index.
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