Gold Continues to ‘Drag Along’ Ahead of the Highly-Anticipated Fed Event

Gold (XAU/USD) crept lower through the early European session on Wednesday and recorded a fresh weekly low at $1913 in the last few hours.

The yellow metal continued on its correction from the $1962 region and has remained depressed for the fourth consecutive session since the US dollar (DXY) picked-up strong demand last week.

Yesterday’s discouraging release of the US Consumer Confidence Index prompted more worries over the recovery of the US economy and extended some support to the USD’s appeal as the global reserve currency. This is coming in the heels of the recent development of a new potential treatment for the highly-infectious Coronavirus disease, which further tarnished gold’s safe-haven appeal.

Furthermore, a strong follow-through rally in the US Treasury bond yields exerted additional pressure on the non-yielding commodity.

However, gold will likely remain stuck-in-place as traders (bulls and bears alike) stay on the sidelines ahead of the Jackson Hole Symposium, which begins tomorrow.

In the meantime, market participants will be looking at the US Durable Goods Orders. However, for reasons explained in this article, there would likely be little or no effect on the market from this data release.

Gold (XAU) Value Forecast — August 26

XAU/USD Major Bias: Sideways

Supply Levels: $1939, $1960, and $1983

Demand Levels: $1913, $1900, and $1865

Gold continues to drag along as significant volatility has been taken out of the market ahead of the event. XAU/USD is now trading close to the prevailing trendline and given that a breakout to the downside hasn’t occurred yet, we can expect to see this line act as a bounce in the near-term. That said, a significant rally from that bounce doesn’t seem likely given the market climate.

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