Gold ended last week 1% better off after Fed Chair Jerome Powell signalled on Friday that rate cuts could arrive as soon as September. But from a chart perspective, gold has been consolidating for several weeks, winding up inside a wide range, observes Fawad Razaqzada, technical analyst at Trading Candles.
Markets were rattled when news broke late Monday that President Trump had dismissed Fed Governor Lisa Cook over alleged mortgage irregularities. Cook disputes Trump’s authority to fire her, meaning the courts will now decide whether she stays, or the Fed is left one member short. With Adriana Kugler having recently resigned and Stephen Miran brought in, the balance of the board already tilts more towards Trump’s stance.
That raises concerns over Fed independence – a narrative investors dislike. For the dollar, this is a clear negative. For the price of gold, it’s another supportive tailwind. But whether it’s enough to trigger a lasting breakout above the key $3,400 resistance level remains to be seen.
The bulls may be frustrated by the lack of any further follow-through despite the renewed dollar weakness. But technically this type of price action often precedes a breakout in the prevailing direction.
Still, it is better to wait for more confirmation. For me, that would be in the form of a daily close above the bearish trend line that has been in place since gold topped in April. If this happens and, ideally, we hold above $3,400 level, then this could pave the way for a potential continuation to re-test April’s all-time high around the $3,500 level.
