The blackout period ended last week, and we started to hear comments from several Fed members. The prevailing sentiment remains is the one of patience and relying on data to determine the appropriate extent of further tightening. While the majority anticipates two additional rate hikes this year, they consistently emphasize that such decision will be determined by the incoming data.
The data we’ve seen last week leans towards supporting a rate hike, as the housing market data exceeded expectations, the US Jobless Claims remained solid, and the US Services PMI beat forecasts. The forthcoming NFP and CPI reports will undeniably play a crucial role in shaping the future expectations, however, if we continue to get good data, we can expect the Fed to raise rates in July, which is also the current market’s expectation.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that after breaking out of the key 1934 support, Gold has bounced on the 61.8% Fibonacci retracement level and pulled back into the broken support turned resistance. The sellers may lean on this resistance zone and pile in for more downside, but another even better spot for shorts is the trendline where we can also find the red 21 moving average. The buyers would need a break above the trendline to gain the conviction for further upside and target the 1984 level.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a divergence with the MACD which is generally a sign of weakening momentum followed by pullbacks or reversals. In this case, the pullback should come into the trendline where we can also find the 61.8% Fibonacci retracement level for further confluence. A break above the trendline would open the door for a rally into the 1984 resistance.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the moving averages on this timeframe are crossed to the upside as the momentum turned bullish after the bounce on the 61.8% Fibonacci retracement level. We can notice that the buyers are leaning on the red 21 moving average and the first target should be the trendline. More conservative sellers may want to see the price make a new lower low breaking the 1915 level before piling in and extend the fall to a new low.
This week is pretty empty on the data front as we only have the US Jobless Claims and the US PCE reports scheduled for the end of the week. However, we will hear again from many Fed officials but since we have not seen any crucial economic indicator yet, it is unlikely that they will provide signals regarding the next course of action.
