The recent US economic data surprised expectations to the upside and pressured gold as the prospects of more rate hikes weigh on the precious metal. In fact, since the FOMC meeting where Fed Chair Powell said that they expect two more rate hikes this year if the economy performs as expected, we had very strong housing market data, solid US Jobless Claims, US Services PMI in expansion and an incredibly strong Consumer Confidence report. If the data remains strong, we can expect the Fed to keep hiking and lead to a sustained depreciation in gold.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold has been on a steady downtrend as the US data keeps on surprising to the upside and the Fed remains hawkish. The break of the key 1934 support should have led to a more aggressive selloff, but we are seeing some resistance from gold. In fact, the bearish momentum looks weak, and this is probably because the market is waiting for the next NFP and CPI reports as they will be pivotal for the Fed’s decision. The moving averages are crossed to the downside, so the bearish trend is clear and, all else being equal, we can expect a fall into the support level at 1805.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been moving very slowly to the downside as the bearish momentum looks weak. In fact, the price is diverging with the MACD, and the sellers would be better off leaning on the downward trendline where they will also encounter the daily 21 moving average. If the price breaks above the trendline, we should see more buyers coming in and extend the rally into the 1984 resistance.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the sellers at the moment are leaning on the 21 moving average to enter the market as they target a break below the recent low at 1902. Today’s US Jobless Claims report will be important for the next move as strong data should lead to more downside, while weak figures should provide the pullback into the trendline.