Weekly Market Analysis / 23 - 27 August 2021

The heavy selling pressure surrounding the greenback allowed the XAU/USD pair to climb above $1,800 at the start of the week. However, the pair struggled to clear the key resistance area that seems to have formed at $1,810 mid-week as investors moved to the sidelines while waiting for FOMC Chairman Jerome Powell’s speech at the Jackson Hole Symposium. Nevertheless, with the USD suffering heavy losses on Friday on Powell’s remarks, gold surged to its highest level since early August near $1,820 and rose more than 2% on a weekly basis.

What Happened Last Week

  • Gold soars to multi-week highs ahead of the weekend.

  • Next target on the upside is located at $1,830.

  • Friday's Nonfarm Payrolls data could alter Fed's taper outlook.

  1. Monday, the risk-positive market environment made it difficult for the USD to find demand. The risk-positive market environment made it difficult for the USD to find demand.

  2. On Tuesday, In the absence of high-tier data releases the USD stayed on the back foot but gold failed to end the day in the positive territory after meeting stiff resistance above $1,800. On Wednesday, the US Census Bureau reported Durable Goods Orders in the United States declined by 0.1%, or $0.4 billion, to $257.2 billion in July.

  3. On Thursday, the US Bureau of Economic Analysis (BEA) announced that it revised the annualized real GDP growth in the second quarter to 6.6% from 6.5%. Moreover, the US Department of Labor said the Initial Jobless Claims increased by 4,000 to 353,000 in the week ending August 20

  4. On Friday, Powell refrained from delivering fresh hints regarding the timing of asset tapering and caused the USD to weaken against its rivals. Although Powell acknowledged that he was in favour of adjusting the asset purchases before the end of the year at the July policy meeting, he added the Delta variant has spread further since then.

News to Follow

  1. On Wednesday, the Automatic Data Processing (ADP) Research Institute will publish the private sector employment data for August. Additionally, the ISM Manufacturing PMI will be looked upon for fresh impetus. Investors are likely to pay close attention to the Prices Paid component to see if input price pressures remain high in the manufacturing sector.

  2. Later in the week, the weekly Initial Jobless Claims and July Factory Orders will be featured in the US economic docket on Thursday ahead of Friday’s August jobs report. The market consensus points to an increase of 763,000 in Nonfarm Payrolls (NFP) following July’s impressive print of 943,000. A disappointing NFP print could confirm a delay in asset tapering and allow XAU/USD to push higher. On the other hand, a positive surprise could help the USD regain its strength and drag gold lower.

Short-Term Outlook

  • The initial hurdle is located at $1,830 ahead of $1,845.

  • Below $1,810 could open the door for additional losses toward $1,800 below $1,780.