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Gold Sell Off Deepens – Powell On Watch

Gold Sell Off Deepens – Powell On Watch

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USD Rally Weighing on GoldGold prices remain under pressure this week as USD strength continues to limit upside momentum in metals. Recent data strength out of the US, along with some hawkish Fed commentary, is keeping alive the chances of a further Fed hike this year. Last week, the FOMC minutes revealed that policy members were still highly concerned by upside inflation risks and consequently saw that further tightening this year might still be appropriate. In light of these comments, incoming data will be closely watched over the next few months. If we see any stickiness or fresh upside in inflation this will no doubt fuel an uptick in hawkish expectations, driving USD higher and weighing on gold prices.PMIs & Jackson Hole On WatchLooking ahead this week, traders will be watching the latest set of US PMIs as well as monitoring comments from Fed chairman Powell who speaks at the bank’s Jackson Hole Symposium on Friday. If Powell is seen echoing the recent Fed hawkishness we heard in the FOMC minutes this will no doubt weigh on gold prices near-term. However, if Powell is seen downplaying risks of any further hikes this year, we should see gold prices reversing sharply higher as USD comes under pressure.Technical ViewsGoldGold prices continue to drift lower within the bear channel which has framed the move lower over recent months. Price is now trading below the 1905.46 level support and with momentum studies bearish, risks are pointed towards further downside. 1871.04 will be the next support to watch, ahead of 1805.18 below.
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