Gold Reverses at Resistance, After Powell Pledges to Keep Going

Gold pushed below the $1,700 level earlier this month, but there wasn’t too much downside pressure after that to follow up, so after a couple of attempts Gold reversed higher again and in the last couple of days, buyers were in control. Although the 100 SMA (green) turned into resistance today and rejected the price.

Then came Jerome Powell’s comments who pledged to “keep going until they get the job done”. That means they will continue with strong rate hikes, which should keep the USD bullish. Although Gold is now facing the 50 SMA (yellow) at the bottom on the H4 chart.

Gold H4 Chart – Reversing Lower at the 100 SMA

The support and resistance level below $1,730 is still working

Fed Chairman Powell Speaking at the Cato Institute

• We need to keep going until we get the job done on inflation
• Very much my view we need to act 4th rightly, strongly on inflation
• My message is the Fed has and accepts responsibility for price stability
• Longer inflation remains above target, greater the risks
• History cautions against prematurely loosening policy
• We are strongly committed to bring inflation down
• We will not be influenced by political considerations
• the Fed focuses on its mandate
• Public’s expectations on inflation play an important role
• Very important that inflation expectations remain anchored
• Today they are well anchored over longer term
• At the short and the clock is ticking and more concerns public will incorporate higher inflation expectations
• We are committed to doing the job of making sure inflation expectations are anchored
• We hope to achieve a period of below trend growth
• Labor is still very, very strong
• Wages are running at elevated levels
• We think our policy moves will be will be able to put growth below trend and get labor market back into balance
• In the last labor market report, we saw welcome increase in labor force participation rate
• Do not see the case for moving to a single mandate on inflation vs. maximum employment AND inflation
• We can achieve both goals in medium-term
• I would not want to see current mandate narrowed or broadened
• We have a precious grant of independence which allows us to pursue our goals without intervention
• Our current operation framework on balance sheet is a good one. No need to return to scarce reserves
• No decision made on central bank digital currency’s
• Digital currency’s are speculative asset. It is not really a store value
• Something that purports to be money ought to be regulated; we need legislation on this
• Federal fiscal policy is not on a sustainable path
• We need to get inflation a job done now any keep at it
• We are always making monetary policy under high uncertainty; makes getting it right very important

As you would expect, Powell reiterates his commitment to inflation as expressed at the Jackson Hole symposium.

GOLD