Gold is expected to experience a slight retracement but mainly consolidate in a range. Resistance levels are at 1924 and 1930, while support levels are at 1903 and 1885. Gold initially rose and then fell following Powell's speech at the global central bank annual meeting. Furthermore, based on CFTC positioning data and technical analysis, the medium-to-long-term downtrend in gold remains unchanged, with short-term potential for consolidation.

Last week (August 21-27), precious metals had mixed performance, with gold rising by 1.0% and silver surging significantly by 4.1%. Gold reversed its downward trend for the month, experiencing a modest rebound to a high of $1924. However, influenced by Powell's hawkish speech, gold continued to decline, eventually closing at $1914.53.

Source: MacroMicro - Percentage Change of Major Precious Metal futures in the 4th Week of August

On August 25, Fed Chair Powell delivered a speech at the Jackson Hole Symposium, emphasizing the importance of the Fed's 2% inflation target and stating that monetary policy decisions would be data-dependent.

Powell mentioned that although the Fed's previous tightening measures over the past year to address high inflation had resulted in a moderation of inflation rates from their peak, the current inflation level remains elevated. If necessary, the Fed will still appropriately raise interest rates. He also pointed out that the economy may not be cooling as expected, with consumer spending remaining robust and economic growth continuing above trend levels. If this situation persists, it could lead to further deterioration of inflation, requiring the Fed to take further tightening measures.

Following Powell's speech at the global central bank gathering, U.S. stocks, bond yields, and the U.S. dollar index rose, while gold experienced an initial rise followed by a moderate recovery near $1915.

Mitrade Analyst

Powell's speech at the global central bank meeting largely aligned with market expectations - U.S. inflation is expected to remain around 3% for a longer period, and the Fed faces greater challenges in policy implementation. The probability of a rate hike in September is low, and interest rates are likely to stay high for an extended period, providing overall support to the U.S. dollar. However, gold seems to have displayed resilience against the expected strengthening of the dollar, perhaps indicating that the market has already priced in this expectation. Nevertheless, gold may be waiting for significant positive signals to trigger a rebound.

The change in nonfarm payrolls data on Friday will guide the trajectory of gold. If the employment figures meet expectations, gold may experience a slight rebound; otherwise, if the performance exceeds expectations, gold could undergo a volatile decline.

Recent data from CFTC position updates show a reduction in speculative long positions and an increase in short positions in the gold market. From August 16 to August 22, speculative long positions decreased by 19,190 to 101,946. During the same period, open interest in gold futures contracts saw a slight decrease of 6,738 to 226,340 for speculative long positions, while short positions increased by 12,452. These indicators suggest that short-term market investors have a bearish outlook on the future of gold.

Mitrade Analyst 

In summary, the reduction in speculative long positions and increase in short positions in the speculative market indicate a bearish sentiment among investors regarding the future of gold. However, it is still necessary to wait for important economic data for further guidance, and gold may experience volatile adjustments this week.

From a technical standpoint, the 60-day MA shows a downward trend. The 14-day RSI value of 48 is below 60. However, on the daily MACD chart, the DIFF and DEA values are negative, while the MACD value is positive. The short-term line has crossed above the long-term line,  indicating  a bullish golden cross. The widening gap and the rising position of the histogram above the zero line suggest short-term consolidation for gold. 

Resistance levels: 1924, 1930

Support levels: 1903, 1885

Source: Investing.com- Aug 28h Gold Daily Chart

Mitrade Analyst 

Considering the analysis of various indicators, the medium to long-term downtrend for gold remains unchanged, with expectations of minor consolidation in the short term. Additionally, investors should pay attention to news and economic data, such as US unemployment rate, non-farm payrolls, and core inflation rates in Europe, which could provide guidance for the future direction of gold.