Gold Price Forecast: XAU/USD hovers around $3,340, awaits fresh clues

XAU/USD Current price: $3,340.55

• US business activity grew at the fastest rate this year in August, according to S&P Global.
• Market players await fresh clues from policymakers amid the Jackson Hole Symposium.
• XAU/USD extends its consolidative phase, sellers reject advances at around $3,350.

Spot Gold trades little changed on Thursday, trading just shy of $3,350 in the American afternoon. Financial markets turned optimistic following the release of the S&P Global preliminary estimates of the United States (US) Purchasing Managers’ Indexes (PMI), as data was much better than anticipated.

“US business activity grew at the fastest rate recorded so far this year in August, according to early ‘flash’ PMI data,” S&P Global reported, with the Composite PMI printing at 55.4, better than the 55.1 posted in July. The manufacturing index jumped to 53.3 from the previous 49.8, while the services output index printed at 55.4, easing from the 55.7 posted in the previous month. The sharp growth in the manufacturing sector surprised market players and led to the conclusion that business activity has strengthened at the beginning of the third quarter.

The US Dollar (USD) surged against most major rivals with the headlines, while Wall Street trimmed a good bunch of its early losses, still trading in the red. US indexes fell ahead of the opening amid caution ahead of policymakers’ words within the Jackson Hole Symposium.

In the meantime, different Federal Reserve (Fed) officials hit the wires. Fed Bank of Cleveland President Beth Hammack said she does not see any sign of a notable economic downturn, adding there’s a “small distance” to get to a neutral policy rate. Earlier in the day, Fed’s Kansas City President Jeff Schmid stated that there is no hurry to cut interest rates, adding that, with the inflation number likely closer to 3 than to 2, there is work to do.

Such hawkish comments weighed on rate cut odds, with the CME FedWatch Tool now reporting a 71.5% chance of a 25 basis points (bps) cut in September, down from roughly 2% a week ago. Modest demand for Gold came due to a firmer USD and tepid stocks’ performance.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair shows it keeps battling a mildly bearish 20 Simple Moving Average (SMA), while meeting buyers near a bullish 100 SMA, the latter at around 3,313.40. Technical indicators in the same chart keep lacking clear directional strength, seesawing around their midlines. The intraday slide resulted in modest downward slopes that are far from suggesting a clear directional interest.

In the near term, and according to the 4-hour chart, XAU/USD is also neutral. Converging 100 and 200 SMAs contained advances at around $3,348, while the pair develops just above an also directionless 20 SMA. Finally, technical indicators head nowhere within neutral levels. The pair needs to clearly conquer the $3,350 to turn bullish, while near-term dips are likely to keep attracting buyers.

Support levels: 3,320.00 3,313.40 3,301.70

Resistance levels: 3,348.00 3,372.30 3,388.45