Chairman Powell speaks but it seems gold traders aren’t listening

Today for the first time since the FOMC meeting concluded last week, Chairman Powell held a press conference where he spoke during congressional testimony. Precious metals traders and investors were listening intently for subtle hints from Chairman Powell, who can shape the future direction of gold and silver prices.

According to Kitco News, “Federal Reserve Chair Jerome Powell said that transitory inflation has been higher and more persistent than expected, but it will “wane.” “Substantial part or perhaps all of the overshoot in inflation comes from the impact of reopening of the economy,” Powell told the members of the House Select Subcommittee on the Coronavirus Crisis on Tuesday.”

He continued to focus upon inflation, insisting that it was a transitory effect brought out by the reopening of businesses across the United States. However, during the testimony Powell did acknowledge that the temporary effects on inflation “have been higher than we expected, and they may turn out to be more persistent than we expected.”

The net result was that gold traded lower ½ an hour prior to his congressional testimony, which did not lift the price of gold as it remained and closed near the lows. As of 6:20 PM EST gold futures basis, the most active August 2021 contract is fixed at $1779.50.

On a technical basis, we see a line in the sand that needs to be held if we are to see gold trade sideways or in fact, higher from this current price. That critical price point is $1769, which is also the 61.8% Fibonacci retracement.

The retracement is created from a data set that begins at the end of March 2021 when gold was trading at $1677 to the highs achieved at the end of May when gold traded to $1918. Last Friday gold closed right at the 61.8% Fibonacci retracement with an intraday low of $1761, just below that retracement level. This was following a $47 decline last Wednesday and an $87 decline on Thursday.

Wishing you, as always, good trading and good health,