After the Kansas City Federal Reserve organizes one of the most significant economic conferences in Jackson Hole where Chairman Jerome Powell’s keynote address today will likely attract the most attention the next gold trigger would occur. This year’s symposium takes place at a crucial time compared to the previous three to four years because the Federal Reserve has started aggressively tightening its monetary policies.
The market is now undecided as to whether Powell will lean hawkish or dovish. Between the present economic downturn and the current inflation rate, Chairman Powell will continue to tread a razor-thin line. The price fluctuation of gold prior to this conference is something to pay close attention to. From its low of $1678 on July 21 to its current price of $1754, gold has increased.
On the MCX and COMEX, the gold trend is different. While prices are trading below the 14- and 50-day moving averages on the COMEX, where the trend is still bearish, prices are trading above the 20- and 50-day moving averages on the MCX. According to the COMEX chart, prices have encountered resistance at the 61.8% ($1764) retracement and support at the 38.6% ($1730) decline. After Gold breaks through the barrier of $1768 (61.8% retracement) and its 50-day moving average, any change in trend will become apparent. Support levels for gold are at $1722 and $1710, while the initial resistance levels are at $1768 and $1781, and $1800.
Therefore, if Powell adopts a very hawkish stance, gold might fall as low as Rs. 49,600, and if he adopts a more dovish stance, we could soon test levels of Rs. 52,400. Technically, the keynote speech today is already pointing to a bullish trend in gold, but it will provide direction for the metal. As a result, any levels around Rs. 51,000 can be bought with an estimated objective of Rs. 52,400 and a stop loss of Rs. 50,500. We feel that even if the Fed is hawkish, it will give bulls an opportunity to buy from dips.