5 min read Gold snapped a five-day winning streak on Wednesday after July core inflation came in above target, lifting the dollar and Treasury yields, and it has recovered much of that move since. Jackson Hole opens today, with Fed chair Kevin Warsh’s first keynote in the role due on Friday.
The 4-hour chart
Gold is consolidating in a tighter range marked in orange, with the Fibonacci retracement zone sitting below.
Gold has reached a point of resistance and has started consolidating within a range, with the range lows at around 4,600 and the range highs at around 4,680. This range is marked in orange. There is a previous range marked out in green below, which broke to the upside after moving up from its range lows, an area that lines up with the 4-hour 50 EMA. For a wider view of how gold got here, see our previous coverage of gold.
The current consolidation is tighter, with lower volatility than the one before it. That often resolves into a volatility expansion, but we simply don’t know in which direction that expansion comes.
If we do see a break below the 4,600 range low area, there is an interesting level below at around 4,450, marked with a white circle, where the Fibonacci retracement zone sits. The 50% level at around 4,510 could act as a minor support on the way down, if the market really is in a new bull market. For now, attention shifts to this consolidation phase and whether we get the break to the upside or the downside.
The 1-hour chart
The 1-hour chart shows price inside a descending channel of lower highs and lower lows, with the 4,590 area marked just beneath.
Now we go into the 1-hour, where we have a clear bearish range, marked out as a channel with lower highs and lower lows. We could potentially see this channel continue to the downside, towards the 0.618 area mentioned above.
The white horizontal line just below price marks the 4,590 area. If price breaks below this area, we could potentially see that move down towards the support below.
If instead we reclaim the range EQ area, the middle of the range, we could potentially see a break above this channel at the same time as reclaiming range EQ. That would be a rather bullish development. Right now, all eyes are on this consolidation range and whether we break to the downside or the upside.
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