Gold Forms Clear Consolidation Range
Gold prices continue to hover near their recent highs, supported by a mix of economic uncertainty and geopolitical tensions. Let’s take a look at the key factors influencing gold's consolidation phase and what traders should be watching next.
Economic and Geopolitical Pressures Provide Dual Support
The U.S. jobs report for August, released last Friday, intensified concerns about the health of the world's largest economy. Nonfarm payrolls underperformed, while wage inflation climbed slightly, adding further uncertainty about the Fed’s potential actions. Initially, markets were pricing in a higher likelihood of a 50-basis-point rate cut by the Fed. However, with rising U.S. Treasury yields and a recovering dollar, expectations have shifted toward a smaller 25-basis-point cut.
Geopolitical tensions are also playing a key role in underpinning gold prices. The ongoing conflict in the Middle East, particularly between Israel and Hamas, has dampened risk appetite. Combined with concerns over a potential global economic slowdown, these factors have sustained gold’s status as a safe-haven, balancing out some of the downward pressure from stronger bond yields and a firmer dollar.
Technical Outlook: Consolidation with Clear Boundaries
From a technical perspective, gold has been consolidating within a well-defined range for several weeks. This consolidation phase has formed a rectangle pattern on the short-term charts, indicating indecision among market participants about the next directional move. The lower boundary of this range coincides with a previously broken resistance area from July and August, now acting as strong support.
Gold (XAU/USD) Daily Candle Chart
Past performance is not a reliable indicator of future results
The consolidation range becomes even clearer when viewed on the hourly candle chart, where price action reveals tighter fluctuations. Given the long-term uptrend, traders may find it compelling to look for bullish reversal patterns forming at support on the hourly chart as potential buying opportunities. However, a decisive break below this support could signal a deeper retracement, possibly opening the door for a more significant correction.
Gold (XAU/USD) Hourly Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83.51% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Economic and Geopolitical Pressures Provide Dual Support
The U.S. jobs report for August, released last Friday, intensified concerns about the health of the world's largest economy. Nonfarm payrolls underperformed, while wage inflation climbed slightly, adding further uncertainty about the Fed’s potential actions. Initially, markets were pricing in a higher likelihood of a 50-basis-point rate cut by the Fed. However, with rising U.S. Treasury yields and a recovering dollar, expectations have shifted toward a smaller 25-basis-point cut.
Geopolitical tensions are also playing a key role in underpinning gold prices. The ongoing conflict in the Middle East, particularly between Israel and Hamas, has dampened risk appetite. Combined with concerns over a potential global economic slowdown, these factors have sustained gold’s status as a safe-haven, balancing out some of the downward pressure from stronger bond yields and a firmer dollar.
Technical Outlook: Consolidation with Clear Boundaries
From a technical perspective, gold has been consolidating within a well-defined range for several weeks. This consolidation phase has formed a rectangle pattern on the short-term charts, indicating indecision among market participants about the next directional move. The lower boundary of this range coincides with a previously broken resistance area from July and August, now acting as strong support.
Gold (XAU/USD) Daily Candle Chart
Past performance is not a reliable indicator of future results
The consolidation range becomes even clearer when viewed on the hourly candle chart, where price action reveals tighter fluctuations. Given the long-term uptrend, traders may find it compelling to look for bullish reversal patterns forming at support on the hourly chart as potential buying opportunities. However, a decisive break below this support could signal a deeper retracement, possibly opening the door for a more significant correction.
Gold (XAU/USD) Hourly Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83.51% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.