Gold Price News: Gold Consolidates Amid Speculative High

Gold begins the week still consolidating, albeit with weakening momentum. With earnings season now largely completed and a Fed rate cut on 18 September all-but guaranteed, investors appear content to remain long despite some recent firming of both short rates and the US dollar. High levels of geopolitical risk and portfolio diversification remain as additional supports. Gold starts the week trading around $2498/toz.

The most recent CFTC Commitments of Traders (CoT) report published late on Friday indicates that speculators further increased net long gold futures positions over the previous week to a 52-month high despite elevated prices. Physical gold ETFs/ETCs have also resumed net inflows with inflows to North American and European-domiciled funds only slightly mitigated by outflows from Asian-based funds. A recent report from the World Gold Council suggesting that Swiss pension fund demand for gold is likely to increase completes a bullish investment demand picture.

From a technical perspective, gold’s recent consolidation has established some new markers. There now appears to be a line of horizontal support/resistance at $2513/toz which gold has been negotiating over the last week, without clear resolution. Additionally, we can also posit a line of ascending oblique support/resistance, currently at $2503/toz as the mid-point of a channel formed from the 26 June and 25 July lows and the 17 July high. This might become important as the standard MACD line has now descended below the signal line.

To the upside, completion of the 26 June, 17 July, 25 July symmetrical triangle suggest an initial upside target of $2543/toz, now co-incident with ascending oblique resistance. To the downside, in addition to ascending oblique support at $2503/toz, we see an ascending 20-day Simple Moving Average at $2479/toz and descending oblique minor support at $2412/toz.

Significant events for gold-watchers early this week include the US ISM Manufacturing PMI for August on 3 September.