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August 31, 2021

Gold On Track To Close Above Important Level

Frank Cabibi

8/31/2021

As the New York trading session ends, gold sits in the green for the day above a key technical indicator that is it's 200-day moving average, an indicator that suggests changes in momentum to the up or downside. In this case, gold's price broke above the 200 DMA and closed right on it yesterday. Currently, gold is above that moving average and could end the day like that.

Our outlook

The Fed said that they would begin tapering, but they didn't know when exactly. They gave us an idea that the reduction of bond-buying may happen late this year, but it still gives no insight on whether they will start hiking interest rates. I think gold and the greenback will go back and forth between investor demand until we get a clearer picture of what's going on, so the best way to gauge gold's performance could probably be on a week-to-week basis. This week looks more promising for the precious metal as the Jackson Hole Symposium caused no big demand spike for the US dollar. Plus, if gold can close above the 200 DMA, we could be in for a solid week for gold.

Trade Setups

XAUUSD

Today's candle suggests that we could see some rejection of the lows on this stair-like pattern gold has been making since mid August. The blue line is gold's 50 DMA while the red is the 200 DMA; a death cross did happen, but price did just break above the 200 which is a bullish sign. If price were to break higher, it would likely test the double top around $1831.

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