Gold held near three-month highs around $4,650 an ounce on Wednesday as traders awaited the Federal Reserve's preferred inflation gauge. Dollar weakness, falling oil prices and stronger Chinese demand are underpinning the metal, while short-term charts point to a possible pullback toward $4,530.
Gold traded around $4,650 per ounce on Wednesday, remaining near three-month highs. Investors are awaiting the latest PCE data, the Federal Reserve's preferred measure of inflation.
Attention is also gradually shifting to Fed Chair Kevin Warsh's speech at the annual Jackson Hole Symposium on Friday. However, markets do not expect him to provide a direct signal on the Fed's September decision.
Dollar weakness and Chinese demand support gold
Gold continues to be supported by the US Treasury's decision to double the size of its long-term bond buybacks in an effort to support market liquidity. Last week, the move helped push the dollar to its lowest level in more than three months.
Further support has come from oil prices falling for a third consecutive session, somewhat easing inflation risks. In China, net gold imports through Hong Kong rose approximately 11% month-on-month in July, driven by growing investment demand.
Technical picture points to a short-term pullback
On the H4 XAU/USD chart, the market has formed a consolidation range around the $4,651 level. A move lower toward $4,530 is expected today, followed by a rebound to $4,600 and then a further decline to $4,500. The MACD indicator supports this scenario, with its signal line above the centre line and trending downward, pointing to short-term downside momentum.
On the H1 chart, the market has completed a downward move to $4,605, followed by a correction to $4,670. A wide consolidation range is forming above $4,605. A downside breakout would open the way toward $4,530, with a subsequent rebound to $4,600 possible. The Stochastic oscillator confirms this scenario, with its signal line below 50 and trending downward, indicating short-term downside pressure.
Both the MACD and Stochastic readings point the same way: downside momentum in the near term, ahead of a possible rebound.
Source: ActionForex
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