Gold market analysis

Gold prices are expected to break through $3,400 in the short term. 7/8 10:10 am Completed

Two Federal Reserve policymakers expressed support for a rate cut in September yesterday. The president of the Federal Reserve Bank of Minneapolis, Kashkari, said that a rate cut may come soon. He believes that it may take a year or even longer to know whether the new tariffs imposed by the United States on foreign countries will continue to exert upward pressure on inflation. However, the current data clearly shows that the US economy is slowing down, which means that it may be appropriate for the Federal Reserve to start adjusting interest rates. 

At least four committee members support a rate cut in September. 

In addition, the president of the San Francisco Federal Reserve, Daly, also indicated that the time for a rate cut is approaching, and there may be a need for two or more rate cuts this year. If we include Waller and Bowman, who supported a rate cut at the July interest rate meeting, among the 12 decision-makers, including Chair Powell, four are likely to support a rate cut in September. If the August employment data released at the beginning of September shows no significant improvement, the possibility of a rate cut in September will be even greater. 

Gold prices fell initially yesterday but rebounded later. As seen from the hourly chart, they dropped to $3,358 in the early afternoon in Europe and then rose, but failed to break through $3,380 in the midday of New York and weakened. Today, they fell to $3,365 in the early Asian session and then rebounded in a piercing pattern, subsequently breaking through the high of yesterday's New York session and rising to nearly $3,382.5. 

$3,365 is a strong intraday support. 

From the hourly chart, gold prices are forming a narrowing triangle and have broken above the descending trend line. The measured upside target is $3,399, approaching the 78.6% retracement level of the largest decline since July 23 at $3,402.5. However, the daily range of gold prices in recent months has mostly been as high as $60. Even if the target is set at $3,400, the range would only be $30, which is within the normal range for gold prices. As gold prices have broken above the descending trend line of the narrowing triangle, it indicates that market forces have determined a new direction. Therefore, if gold prices can break above $3,390, they are likely to challenge $3,439 within the day. Of course, investors should also be prepared for both scenarios. If the prices fall below the descending trend line, the measured downside target is $3,324. However, at present, it is estimated that $3,365 is a strong support level for the day, and it is more likely that the prices will fluctuate above $3,370, with the main direction being a gradual test of higher levels. 

The above content is for reference only and does not constitute investment advice. 

MTF Special Analyst Zheng Guangfu