(Kitco Commentary) - Gold continues to demonstrate remarkable underlying strength, trading to a fresh three-month high today and marking its seventh consecutive higher high on the daily candlestick chart of December futures. Although the most active contract ultimately settled relatively flat, it did so above the 38.2% Fibonacci retracement level at $4,692 — a key level that had not yet been tested — after oscillating above and below it throughout the session.
More importantly, gold has positioned itself well to minimize any potential drawdown. The 200-day moving average, currently at $4,635, has only recently flipped from resistance to support and now stands as a second layer of strong technical footing beneath the market. With both the Fibonacci retracement and the 200-day average underpinning price, the structure remains constructive even as momentum cools.
A Doji in the Star Position
Today's session produced the smallest daily trading range since July 24, painting a textbook doji in the star position. The doji — which translates roughly to "the same thing," or no change — forms when buyers and sellers are evenly matched, opening and closing at virtually the same price. The star position refers to a candle whose real body sits completely above the body of the preceding candlestick.
On its own, a doji star is a signal of indecision rather than reversal. However, should tomorrow's candle print as a strong red body closing well into the range of the prior long green candle, the three-candle sequence would complete a three rivers evening star — one of the more reliable top reversal patterns in Japanese candlestick analysis. That said, with the Jackson Hole Economic Symposium set for later this week, it is unlikely gold will make any decisive move before market participants hear from the Federal Reserve.
Silver Finds Its Footing
While gold pauses, silver has quietly reversed course. After declining over the last few trading days, spot silver has popped modestly higher in overseas trading, currently up 0.35%. It is worth watching whether silver's relative strength persists into the New York session, as divergences between the two metals at inflection points often precede the next directional move.
All Eyes on Jackson Hole
Although the next FOMC meeting is still a month away, traders will be listening intently to the Federal Reserve Chairman's keynote address at Jackson Hole for any shift in tone regarding the path of monetary policy. Historically, the symposium has served as a venue for signaling policy pivots well ahead of formal action.
Current probabilities from the CME's FedWatch tool indicate a 40% chance of a rate hike at the September meeting. Any language from the Chairman that moves that needle — in either direction — will be felt immediately in dollar-denominated assets, with gold and silver first in line.
Until then, the doji says it best: for the moment, the market has decided not to decide.
For more daily market commentary and analysis, visit thegoldforecast.com.
Wishing you, as always, good trading,
