Gold Price News: Gold Bucks Rate Headwinds

Performance & Positioning

Gold starts the week trading around $2436/toz, having clawed back most of the losses taken early last week. The most recent CFTC Commitments of Traders (CoT) report, published late on 9 August suggests that net speculative gold futures positions were again trimmed from the near 29-month high registered on 26 July. Although some are 13% lower than these peak levels, this remains broadly consistent with the elevated levels of speculative activity seen since the start of June 2024, which is encouraging given considerable capital market volatility. Physical gold ETF/ETC flows suggest that although there was some buying on weakness last week, last week saw cumulative outflows.

Fundamental Drivers

US rate markets have firmed significantly from the market panic evidenced a week ago as traders squared positions and analysts reassessed the probability of a US recession. CME FedWatch now suggests futures are currently pricing in c. 51% probability of a 0.25% cut and a c. 49% probability of a 0.5% cut in the key US Fed Funds rate at the next FOMC meeting on 18 September. This, in conjunction with a parallel move up in 10-year Treasury yields, constitutes a headwind for gold. Nevertheless, heightened geopolitical risk and volatility in other markets remains supportive.

Friday saw major gold miner Gold Fields indicating that production had been lower than expected so far this year due to adverse weather at sites in Chile and Australia and other operational issues at other mines in Australia and South Africa. Upcoming market events for gold watchers include US PPI data for July on 13 August,

Technical Analysis

From a technical perspective, gold has largely been confined to rangebound trading since early July. Ultimately, successive highs on 17 July and 2 August could not be sustained and there now appears to be major horizontal resistance at $2468/toz.

However, more recent price action has seen gold break back up through a rising 50-day Simple Moving Average at $2371/toz, albeit on declining volumes and there are now signs that it has also broken major horizontal resistance (now support) at $2426/toz. The latter support is currently tentative given that momentum indicators such as MACD and RSI appear neutral to bearish, and volumes remain somewhat subdued. Despite this, gold’s technical position appears to be more constructive than that of silver with the next major resistance level near all-time highs at $2468/toz.

Major horizontal support remains indicated just below $2363/toz and more proximate support at the rising 20-day Simple Moving Average and descending oblique support, both at $2415/toz. In the event of a bigger pullback, further minor descending oblique support is suggested at $2371/toz, currently coinciding with a rising 50-day Simple Moving Average. Further major horizontal support is offered at $2362/toz.