The recovering market risk appetite saw gold prices posting declines for the second day. However, the pace of declines is somewhat smaller when comparing to previous gains. For the moment, investors are likely to remain on the sidelines ahead of the big-ticket events this week. These include the ECB and Fed meeting minutes and the Jackson Hole Symposium due later in the week.
Has Gold Formed a Top in the Rally?
The current pace of gains looks to have stalled for the moment. With gold prices forming a lower high, it is likely that the current retracement will see a retest of the breakout level. The support area near 1508 is likely to be tested. This is where resistance will be established in the near term. As long as this holds as resistance, we expect the downside to prevail. The next downside target is at 1485.
