Chairman Powell To Deliver Testimony to Congress This Week
Market participants, traders and investors are anxiously awaiting this week’s testimony to Congress by the Chairman of the Federal Reserve, Jerome Powell. This is possibly the most important event to take place this week in regards to the future direction of gold. Although gold traded above $1400 per ounce in overseas trading last night, once trading began in New York gold prices softened and as of 5:35 PM EDT is trading at $1397.60, this basis the most active August futures contract. Although this decline is nominal, a decline of $2.50 today indicates some uncertainty as to what Chairman Powell will convey during his testimony this week.
While the actual statement is unknown it is clear that his words could easily provide the information, which will guide traders and initiate the next major move in gold pricing. At the same time we must acknowledge that after the tremendous selloff which occurred on Friday taking gold from a high of $1426 to a low of $1389, today’s recovery which began on Monday morning in Australia and carried across Hong Kong, London and then to New York showed that traders maintained a bullish market sentiment in that current pricing is well above the lows achieved on Friday. The fact that gold prices traded above $1400 per ounce and then softened to a few dollars below that price point indicates that there still might be the potential for resistance at $1400 per ounce.
While the U.S. Jobs report numbers which came out last week put definitive and strong downside pressure on gold prices, traders realize that other factors continue to be supportive of the precious yellow metal.
Our technical studies indicate that there is major support for gold at approximately $1390, the lowest trading point achieved on Friday. While at the same time there is minor resistance at $1400 per ounce.
That being said major resistance for gold can be found at $1440 per ounce a price point achieved twice over the last 10 trading days. We continue to believe that overall gold has returned to its bullish demeanor and has a high probability of moving higher throughout the week. The caveat to this statement is obviously any remarks made by Chairman Powell which would indicate that the proposed rate cuts have been put on hold.
Wishing you as always, good trading,
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