The recent stronger than expected US data weighed on Gold as the risk of a hawkish Fed increased. In fact, the US real yields and the US Dollar rallied recently which put downward pressure on the market. In the bigger picture, Gold should remain supported as we head into the easing cycle, but in the short-term, strong US data is likely to delay rate cuts and weigh on prices.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold has been pulling back from the highs and it’s now near the previous all-time high around the 2142 level. This is where we can expect the buyers to step in with a defined risk below the level to position for a rally into a new all-time high. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 2080 support zone.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the buyers will have a much better risk to reward setup around the 2080 level where we can also find the confluence with the trendline and the 50% Fibonacci retracement level. As of now, the bias remains tilted to the downside, but we will need to watch out for the FOMC rate decision and the US data as they can change the setups.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have some resistance around the 2151 level where we can find the confluence of the recent swing low level and the minor downward trendline. This is where we can expect the sellers to step in with a defined risk above the trendline to position for a break below the 2142 level with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into the major downward trendline around the 2165 level.
Upcoming Events
This week we have the FOMC rate decision on Wednesday where the Fed is expected to keep rates unchanged. The market will be on the lookout for hawkish surprises though following the stronger than expected inflation data. On Thursday, we conclude with the latest US PMIs and Jobless Claims figures. A hawkish Fed and strong data is likely to weigh on Gold, while a dovish Fed and weak figures should give it a boost.
