Gold held steady on Monday as investors processed hawkish comments from Federal Reserve Chair Jerome Powell. The comments came ahead of a week filled with U.S. economic data that is expected to provide insights into inflation and the labor market. Despite the steady performance, the higher dollar and a decrease in 10-year Treasury yields limited gold's gains. The upcoming economic data, including the U.S. core PCE inflation and August non-farm payroll report, will likely provide more clarity on the strength of the economy and most likely spark volatility in the instruments traded against the greenback.
From the technical point of view gold prices have corrected to the upside after finding sufficient support on the lower band of the Bollinger bands and is now trading in the area between the 23.6% and the 38.2% of the daily Fibonacci retracement level. The combination of the Stochastic oscillator being near the extreme overbought level and the 50 day moving average trading below the 100 day moving average is a strong indication that the price might be about to resume the previous bearish trend. If this happens then we might see the first point of support around the $1.906 and the second level of support around $1,900 being reached. The first area of support is the 23.6% of the daily Fibonacci retracement while the second area of support is the psychological support of the round number and is also an area on the chart that the price failed to make a valid break below since mid March.