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Gold drops moderately in anticipation of Jerome Powell’s speech

On Thursday morning gold slightly declined after moderate gains of the previous day. Positive data from China put moderate pressure on gold. According to the report submitted in July, compared with the same period last year, the profit of Chinese manufacturing companies increased by 19.6%. A month earlier, the growth of this indicator was at the level of 11.2%. Profit growth was boosted by a better operating environment for the automotive industry and increased demand for electronic devices both within and outside China.

 

Now trading activity in the market is declining. Investors are expecting a speech by FRS Chairman Jerome Powell at the opening of a symposium in Jackson Hole. Powell is expected to announce the conclusions of a year-long discussion on changing the central bank's monetary policy strategy. Also, many investors are awaiting statements from Powell on further measures to stimulate the economy in the context of COVID-19. Ongoing coronavirus outbreaks are making it difficult for the US economy to recover to pre-crisis levels. Powell's speech will be the centerpiece of the day.

 

Also in the US today will be released interim data on US GDP for the 2nd quarter and statistics on pending sales in the real estate market.

 

On the chart yesterday, we saw a false breakout of the lower flat border of 1914.00-1955.00. This is a fairly good reversal signal, within which we can see the price breaking from the upper border of the flat. Today, upward pressure on the 1955.00 level is increasing. Within the day, we are expecting a breakdown of this level and the growth of quotations to 1971.00 and above.

 

  • Resistance levels: 1955.00, 1971.00, 1993.00.

 

  • Support levels: 1914.00, 1875.00, 1850.00.

 

The main scenario - a breakdown of resistance at 1955.00 and an increase to 1971.00.

 

An alternative scenario - consolidation in the range of 1914.00-1955.00.

 

The current fundamental outlook is neutral. We consider longs from the level of 1930.00.

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