On Wednesday, August 19, international spot gold experienced a sharp rally as multiple factors aligned to boost the precious metal. Reports emerged that the United States had secretly opened a shipping lane through the Strait of Hormuz, facilitating the daily transport of approximately 10 million barrels of oil. Simultaneously, former President Trump indicated the possibility of resuming negotiations, while Federal Reserve meeting minutes revealed that most officials still anticipate a gradual decline in inflation. These developments collectively pressured oil prices and inflation expectations, providing support for gold.
The primary catalyst, however, came from the US Treasury's announcement to at least double the scale of its long-term bond buyback operations. This triggered a significant selloff in the US dollar index, which broke decisively below the 99 threshold, while US Treasury yields also pulled back sharply. This combination served as the main driving force behind gold's impressive advance, pushing prices through recent resistance levels and testing the 200-day moving average along with the 30-week moving average vicinity.
This price action has brought gold to a critical juncture. A sustained breakout above these resistance levels would signal the resumption of the bull market narrative, while a rejection could lead to a pullback. However, given the intact medium-to-long-term bullish thesis, any corrective move toward trend support would still represent an attractive entry opportunity for buyers.
Looking at the specific price action, gold opened the Asian session at $4,335.39 per ounce and initially recorded the day's low of $4,324.51. Prices then consolidated and began climbing, with momentum building during the US session. The rally extended into late US trading, reaching an intraday high of $4,524.38 before settling at $4,522.72. The daily range spanned $199.87, with a gain of $187.33, representing a robust 4.32% increase.
Looking ahead to Thursday, August 20, the initial upside momentum has moderated somewhat due to profit-taking following the sharp advance and resistance pressures. However, the technical backdrop remains constructive. The dollar index broke below its 200-day moving average support yesterday and continues to trade beneath its 200-week moving average on the weekly chart, suggesting a weaker outlook that should provide medium-term support for gold. Additionally, crude oil prices are in a consolidation phase, limiting short-term inflationary pressures, which further favors the bullish case for gold.
That said, traders should be mindful of potential short-term pullback needs. The dollar index may experience a modest technical bounce following yesterday's steep decline, and oil prices have underlying support. Therefore, it would be prudent to wait for a pullback toward support levels before initiating new long positions rather than chasing the market at current levels.
Today's economic calendar features the US initial jobless claims for the week ending August 15 and the Philadelphia Fed manufacturing index for August. Market expectations lean toward these data points being gold-friendly. The operational bias should remain bullish, as the 30-week moving average and downtrend resistance line are unlikely to generate sustained selling pressure. The probability favors an eventual breakout to the upside with continued strength.
On the weekly chart, gold has strengthened again this week, testing the downtrend line and 30-week moving average resistance as anticipated. While some resistance-driven pullback is possible, the ZZ indicator has not signaled a rally top, and momentum indicators continue to develop bullish signals. This suggests the bulls retain forward potential, and any pullback should be viewed as a buying opportunity. The path of least resistance points toward further gains, with targets of $4,700 or even $4,800.
On the daily chart, yesterday's substantial rally broke through resistance, and prices have now re-engaged with the 200-day moving average area. Some near-term pullback risk exists, but given that prices have reclaimed ground above the 5- and 10-day moving averages, the bulls hold the advantage. Any corrective move toward those moving average support levels would present another opportunity to add long positions.
For intraday trading parameters, the following levels serve as initial reference points—actual entry and exit levels will be confirmed based on live positions. For gold, support is seen near $4,450 or $4,400, with resistance at $4,550 or $4,600. For silver, support lies at $66.20 or $65.20, with resistance at $68.00 or $69.10.
This market commentary is provided for informational purposes only and does not constitute investment advice. Investors should conduct their own research and assume full responsibility for their trading decisions.
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