Gold Price Forecast: $3,378 Breakout Tested as Fed Signals Shape Next Week
Gold spent most of last week stuck in a triangle, bouncing between $3,313 and $3,378 as traders digested US data...
Quick overview
- Gold traded within a tight range last week before breaking out following Fed Chair Jerome Powell's comments on inflation and interest rates.
- Technical indicators show bullish momentum for gold, with a breakout above key resistance levels and strong volume supporting the rally.
- Upcoming US economic data, particularly GDP figures, will be crucial in determining gold's short-term trajectory and potential for further gains.
- Traders are advised to enter long positions on retests of support levels while maintaining a stop-loss below $3,313 to manage risk.
Gold spent most of last week stuck in a triangle, bouncing between $3,313 and $3,378 as traders digested US data and the Fed’s tone. The real trigger came from Jackson Hole where Fed Chair Jerome Powell said inflation is improving but rate cuts aren’t coming soon. His “data dependent” comments kept markets cautious but gold broke out big on Friday.
On the charts, gold broke above the descending trendline and the 50 period SMA at $3,342 and printed a wide bodied bullish engulfing candle. This wasn’t a shallow move – volume supported the rally so buyers are conviction. RSI surged to 66 but didn’t flash overbought and MACD produced a bullish crossover with the histogram going positive. The higher lows since mid July and the engulfing pattern gives gold a good short term setup.
US data was mixed last week: unemployment claims rose to 235K, Philly Fed contracted but PMI surprised to the upside. That cocktail of numbers supports the Fed’s patient stance and leaves gold well positioned as a hedge against policy uncertainty.
US Events to Watch This Week
This week’s US calendar is packed with data that will test gold’s breakout momentum. Traders will be watching housing, GDP and inflation numbers for clues on Fed timing:
- Mon, Aug 25 – New Home Sales: 635K forecast vs 627K prior
- Tue, Aug 26 – Core Durable Goods: +0.3% forecast; Durable Goods: -3.8%
- Tue, Aug 26 – CB Consumer Confidence: 96.3 forecast vs 97.2
- Wed, Aug 27 – Light calendar, consolidation risk
- Thu, Aug 28 – Prelim GDP: 3.1% forecast vs 3.0% prior
- Thu, Aug 28 – Unemployment Claims: 231K forecast vs 235K prior
- Thu, Aug 28 – Pending Home Sales: -0.3% forecast vs -0.8% prior
- Fri, Aug 29 – Core PCE: +0.3% forecast, inflation benchmark for Fed* Fri, Aug 29 – UoM Consumer Sentiment: 58.6
Thursday’s GDP is the highlight. A stronger number may weigh on gold by reducing rate cut expectations, weaker data could add to the breakout momentum.
Gold Price Forecast: Bulls Target $3,405 and $3,433
Gold is at a key level. Friday’s breakout candle got price back to $3,378 resistance where previous supply capped rallies in July and August. A daily close above this level would clear the way to $3,405 and then $3,433 – the July high.
Momentum is bullish. RSI is trending higher without overbought pressure, MACD is positive and the recent series of doji and spinning tops inside the triangle have given way to a wide bodied bullish engulfing. That shift from indecision to conviction is often the start of a new leg higher.
For new traders, the key is to respect support. The breakout zone near $3,351-$3,342, supported by the 50 period SMA should act as a cushion. A drop below $3,313 would invalidate the bullish setup and reverse momentum back to the sellers.
Trade Setup:
- Entry: Longs on a retest of $3,351-$3,342
- Stop: Below $3,313 (triangle base)
- Targets: $3,405 first, then $3,433 if momentum holds
With the Fed still data dependent and macro risks in play, gold’s technical breakout gives traders a clean structure: defined risk below, open space above.
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