The price of gold (XAU/USD) bounced-off weekly lows on Thursday following yesterday’s plunge to top $1,500 before retreating to settle below the key level. The price of the yellow metal continues to trade in a consolidative triangle formation which follows the massive plunge witnessed at the start of this month.
The gold price has been trading in bursts of consolidative patterns which are shortly followed by a major breakout and the same thing appears to be happening again. Towards the end of August, the consolidative pattern was sideways and concluded with a bearish breakout. The same thing could happen in the near term.
XAU/USD (Gold) Fundamentals Overview
From a fundamental perspective, the price of the yellow metal is trading at the back of a busy week in the US. The Fed’s rate cut may have highlighted the week, but there was more to look out for with key economic reports released.
On Tuesday, the US industrial Production (MoM) beat expectations of 0.2% for August with 0.6%. Capacity Utilization came in at 77.9% versus an expectation of 77.6%.
And on Wednesday, Housing Starts for last month beat the expectation of 4.5% change with a massive 12.3% change while Building Permits were up 7.7% versus 6.9% change in the previous month.
On Thursday, continuing jobless claims for the week ending Sep. 6, came in at 1.661M versus a predicted figure of 1.672M while the initial jobless claims for last week beat the expectation of 213k with 208k.
XAU/USD (Gold) Technical Analysis (the 60-min Chart)
Technically, the XAU/USD (gold) appears to be trading in a bearish consolidative wedge. The flat base suggests that the next breakout could be bearish and this signals optimism for the bears going into Friday.
The bears will be targeting short-term profits at around $1,493 or lower at $1,486 while the bulls will be looking to pounce at around $1,508 or higher at $1,519 should the rebound continue.
XAU/USD (Gold) Technical Analysis (the Daily Chart)
In the daily chart, the price of gold appears to be trading in a bullish curve but has recently pulled back amid short-term bullish bearish pressure. There are two main support and resistance zones that traders could target in the coming weeks.
The bulls will be targeting long-term profits at around $1,521 and higher at $1,555 in the hope of a rebound while the bears will look to pounce by targeting profits at around $1,485 or lower at $1,448.
In summary, the price of gold appears to be experiencing short-term bearish p[ressure but in the long-term, the bulls still hold the cards. However, trend reversal could be forming as the bears seek to seize control.