Gold: rallies as cut nearsInvestors' interest for gold is again on the scene. The price of gold took the up-course during the whole week, while only on Friday it gained around 1%, closing the week at $3.448. The Fed's favorite inflation gauge was posted during the week, revealing inflation in check with PCE in July of 0,2%. This supported market expectations that the actual rate cut could occur in September, as Fed Chair Powell indirectly noted at the Jackson Hole Symposium.
With Friday's strong move, the RSI was pushed further toward the overbought market side. However, at the level of 65, the clear overbought market side has not been reached, leaving some space for the indicator to move toward higher grounds. At the same time, MA 50 continues to slow its divergence from MA200. With still a high distance between two lines, the potential cross is certainly not in store.
This week was positive for the price of gold, in expectation of a Fed rate cut. Still, it should be considered that the week ahead is bringing another two important indicators, PCE and JOLTs, both related to Fed's dual mandate. Any deviation of these indicators from market expectations, might trigger higher volatility. In any case, considering strong push toward the upside, it might expect some profit-taking to take place at the start of the week ahead. In this sense, a short bull-back from current levels is quite possible, however, some stronger move should not be expected.
