XAU – Gold Consolidates at High Levels Awaiting Change; Focus on Tonight's Inflation Data

The U.S. Treasury Department announced on Monday an expansion of sanctions against Iran, imposing new sanctions on 60 individuals, entities, and vessels. Iran quickly responded strongly, condemning the new U.S. sanctions as "blatant violations" and vowing retaliation. More disturbingly, Iranian state television broadcast a video over the weekend discussing the assassination of Barron Trump, the 20-year-old son of U.S. President Donald Trump, claiming he was being monitored and offering a $10 million bounty. This unprecedented provocation has undoubtedly pushed the U.S.-Iran confrontation to a new level.

This week's focus is on the U.S. July Personal Consumption Expenditures (PCE) inflation report to be released on Wednesday, and Federal Reserve Chairman Warsh's speech at the Jackson Hole Symposium on Friday. The PCE price index is the Fed's official measure of inflation. The market widely expects the overall PCE price index to rise 3.6% year-on-year in July, while the core PCE price index is expected to remain at 3.3% year-on-year. The CME FedWatch Tool shows that traders are currently pricing in only about a 38% probability of a U.S. rate hike in September. A month ago, this probability was as high as around 55%. The market will be closely watching Warsh's speech at Jackson Hole for any clues about interest rate trends and comments on the Treasury's debt buyback program.

Gold touched $4696.55 on Tuesday, a three-month high since May 14, before falling back to $4605. It then rebounded, reaching above $4650. On one hand, gold encountered technical selling pressure near the $4700 resistance level; on the other hand, bargain hunting prompted a rapid rebound. The overall trend is expected to be a slight pullback followed by a significant upward move, with the first key resistance level at $4718.9. However, gold is currently still within a descending channel from its historical high. The top of this channel was tested last week, and resistance this week is around $4608. A successful break and hold above this level could lead to further challenges at $4668, $4764, and $4801, with a medium-term target extending to the top of the large sideways channel around $5011. Based on the cumulative decline since the beginning of the year, a 38.2% retracement level would target $4576, while extended retracements would reach $4771 and $4966 respectively.

On the downside, the supporting levels to watch are $4544, $4463, and $4343. Following a period of consolidation in the previous two weeks and early last week, gold prices broke out significantly on Wednesday, establishing the $4411-$4391 area as a new support zone. Additionally, the upward trendline formed by the recent two lows provides support around $4399. A pullback but hold above this area could present a re-entry opportunity; a break below $4234 or $4173 would warrant immediate stop-loss orders to manage risk.

Immediate resistance levels are estimated at $4654 and $4679, with further resistance at $4704 and $4747. Short-term support is estimated at $4633 and $4613, with the next levels at $4588 and $4563.

London Gold Price on August 26:

Forecasted Range: 4633 – 4654
Resistance: 4679 – 4704 – 4747
Support: 4613 – 4588 – 4563

SPDR Gold Trust Holdings:
August 17 – 1,030.66 tons
August 18 – 1,025.24 tons
August 19 – 1,034.65 tons
August 20 – 1,038.93 tons
August 21 – 1,047.21 tons
August 24 – 1,049.49 tons
August 25 – 1,048.35 tons

25/8 AM London Gold Fix: $4625.65 
25/8 PM London Gold Fix: $4615.45 

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