The price of gold – after dropping to reach the support level of $1,884.84 per ounce on August 17 and August 19 – started to rebound, trading above $1,900 in a bullish structure to retest the previous month’s high of $1,987.30.
This follows US Federal Reserve Chair Jerome Powell’s speech on August 25 at Jackson Hole.
Powell “signalled that the central bank could hold [interest] rates steady at its next policy meeting in September, but left the door open to lifting them later this year if the economy doesn’t slow more,” the Wall Street Journal reported on August 25.
But will the gold price keep bullish momentum and reach the target of the July high?
This week, gold traded slowly in a bullish trend on Tuesday to retest the Monday high of $1,925, before falling back to hit a day low of $1,914.25.
Following the release on August 29 of weak data regarding US consumer confidence and employment, gold rebounded, trading strongly to hit a new high of $1,937.90
The CB Consumer Confidence was at 106.1, down from the previous 114.0, while JOLTS Job Openings declined to 8.83 million from the preceeding 9.17 million.
“Job openings declined to a seasonally adjusted 8.8 million in July from the prior month, the Labor Department reported on Tuesday. That was the lowest level since March 21, but it was still well above pre-pandemic levels and the 5.8 million unemployed people in July,” WSJ said on August 29.
Traditionally, gold inversely correlates with the US dollar – if the dollar weakens, gold rises, and vice versa.
And with Average Hourly Earnings for August expected to decline to 0.3 per cent from July’s 0.4 per cent, this could help dampen consumer spending and rein in the greenback.
This week, the markets await the release of the Non-Farm Employment Change data for August on September 1, with jobs expected to have declined to 169,000 from 187,000 in July.
Also out that day, Average Hourly Earnings are expected to have dropped to 0.3 per cent from 0.4 per cent, with the unemployment rate to have remained unchanged at 3.5 per cent.
The market may remain positive on gold following the release of weak economic data due to the recent rebound, even creating a new high and testing the $1,987.30 level should the August figures print as expected.