Gold (XAU/USD) Eyes $3383/oz After Bullish Pennant Breakout. Will Fed Chair Powell Add Fuel to the Rally?

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Gold prices have remained choppy this week with the precious metal remaining in the range between $3300-$3350/oz for the majority of the week. Two key levels which for now it appears buyers and sellers are defending ahead of the Jackson Hole Symposium and Geopolitical developments.

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Strong US PMI Data Fails to Inspire Breakout

A strong PMI release may have just aided Fed Chair Jerome Powell. The S&P Global US Composite PMI rose to 55.4 in August 2025, up from 55.1 in July, showing growth for the 31st straight month, according to flash estimates.

This was also the fastest growth seen this year. The services sector continued to grow strongly, though activity slightly slowed from July’s peak (55.4 vs 55.7). Meanwhile, manufacturing bounced back, with the PMI rising to 53.3 from 49.8 in July, its highest level since May 2022.

Hiring picked up, with job creation hitting one of the fastest rates in three years. Businesses also reported the biggest backlog of unfinished work since May 2022.

Now all of this sounds like a solid economy and looking at the data more closely we see a few other interesting points.

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S&P Global’s Chris Williamson noted the survey also showed mounting inflation pressures. Businesses are increasingly passing tariff-related costs through to consumers, and the PMI price indices are now running at their highest levels in three years. Selling prices for goods and services have moved higher, suggesting that consumer inflation will “rise further above the Fed’s 2% target in the coming months.

The PMI results create more uncertainty for the Fed. Instead of supporting the idea of immediate rate cuts, the data suggest the economy is closer to conditions that typically lead to rate hikes.

“With increased business activity, hiring, and rising prices shown in the survey, the PMI data lean more toward rate hikes than cuts,” Williamson explained.

The move did lead to an immediate bounce for the US Dollar Index which has since continued its advance. However as has been the case with Gold of late, the precious metal saw an immediate drop but has since recovered to a near daily high at $3345/oz.

This highlights the indecision in Gold at the moment with market participants likely keeping an eye on the Jackson Hole Symposium and Fed Chair Powell.

Jackson Hole and Gold Prices Moving Forward

Heading into Fed Chair Jerome Powell's speech at Jackson Hole tomorrow Gold appears in desperate need of a catalyst.

The Russia-Ukraine situation has a lot of variables to contend with before an actual peace deal may be agreed. Thus geopolitical risk premium is likely to remain in play in the near-term.

This leaves monetary policy, where like we discussed above today's PMI data has created more uncertainty for the Fed. The FED minutes also did not really provide anything new to the equation so will there be sparks tomorrow or will the market reaction be muted?

Technical Analysis - Gold (XAU/USD)

Technical analysis paints a nice picture for bulls though with a break of a bullish pennant pattern which was in play.

If you believe the old trading adage ‘technicals hint at what's to come from the fundamentals’ then the question is, are we getting a hint of a dovish speech by Fed Chair Powell tomorrow?

From a technical standpoint, Gold has broken the bullish pennant on the four-hour chart. A pullback and retest occurred today so Gold is on its way toward a potential target of $3383/oz.

There is significant resistance just ahead which Gold needs to overcome. The 50 and 100-day MA rest at 3343 and 3348 respectively and at this stage are providing a significant hurdle.

Supporting a bullish narrative is the period-14 RSI remains above the 50 level which hints that the momentum remains bullish.

Gold (XAU/USD) Daily Chart, August 21, 2025

Source: TradingView (click to enlarge)

Client Sentiment Data - XAU/USD

Looking at OANDA client sentiment data and market participants are Long on Gold with 70% of traders net-long. I prefer to take a contrarian view toward crowd sentiment and thus the fact that the majority of traders are net-long suggests that Gold prices could continue to slide in the near-term.

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