US PMIs Due

Gold prices continue to soar this week with the futures market pushing higher into record territory. The push comes despite some hawkish commentary from the Fed yesterday with some members heard voicing concern over inflationary risks and urging the Fed to show caution with any furtehr easing. Indeed, some members argue that no further easing was needed this year at all. Traders now brace for Fed chairman Powell who speaks later today, preceded by the release of the latest US PMI data. Both services and manufacturing data are forecast to have cooled slightly, though still seen in positive territory. If a decline is confirmed, particularly if its deeper than forecast, this should keep USD pressured near-term allowing gold to push higher.

Powell in Focus

However, Powell will clearly be the bigger focus. If the Fed chair echoes concerns over inflation and seems to downplay near-term easing prospects, this could cause a squeeze higher in USD, capping gold here. On the other hand, if Powell focuses more on weakness in the jobs market and the need for furtehr easing, this could fuel a fresh wave of selling in USD, driving gold prices firmly higher near-term. Looking ahead this week, we also have US jobless claims, final quarterly GDP and core PCE to watch, all key readings for gauging likely Fed action keeping volatility risks high through the week.

Technical Views

Gold

The market continues to push higher into unchartered territory here. Price is now testing the 1.27% Fib extension level around the 3,795.35 level. With momentum studies bullish, focus is on a continued push higher with the 1.61% extension at 3,977.86 the next target for bulls. Longer-term, the outlook remains bullish while price holds above 3,493.81.