Nearby Gold Monthly Technical Analysis for August 2015

Nearby Gold futures closed sharply lower in July, finishing down nearly 7.0%. Talk of higher U.S. interest rates drove up the U.S. Dollar, consequently leading to the break in gold prices. The resolution to the Greek debt crisis also pressured prices. Turmoil in the Chinese financial markets led to aggressive fund liquidation which also drove prices lower.

During the last week in July, the Fed issued a hawkish monetary policy statement which many traders perceived to indicate that the central bank was on a path towards a September interest rate hike. The August 7 U.S. Non-Farm Payrolls report could determine the direction of the market for the month. Early estimates have traders speculating that the economy added 224K new jobs. A number substantially above this level will be bearish for gold. Missing the number to the downside will likely underpin gold and lead to a short-covering rally.

Technically, the close at $1095.10 has put the market in a position to test a long-term uptrending angle at $1068.10. The daily chart opens up to the downside under this angle with the next target the April 2009 bottom at $918.40. This is followed by the next uptrending angle at $904.10.

On the upside, the old bottoms at $1134.60 and $1142.50 are two potential minor resistance levels. Overcoming these level could create enough upside momentum to challenge the next resistance levels at $1204.80.

Look for volatility this month because the price action is likely to be driven by news events. The main event is the August 7 U.S. jobs report. Trader reaction to this report should set the tone for the month.