Since the last FOMC meeting the US economic data has been consistently surprising to the upside and led to a more hawkish repricing in interest rates expectations ultimately pressuring gold. The Fed members are also talking about two more rate hikes this year if the data remains strong. As long as we keep seeing strength in the data, we can expect lower lows in gold, but if the data starts to miss expectations, we should see gold coming back strongly.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold has been struggling to break the 61.8% Fibonacci retracement level to the downside as the market is awaiting the next NFP and CPI reports. The trend is clearly bearish as the moving averages are crossed to the downside, the price is making lower lows and lower highs and the key support levels like the trendline and the 1934 support got broken. The target for the sellers is the 1805 swing low level and the buyers will need first a break above the 1934 resistance to regain control and target the 1984 level first and the 2076 high next.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price jumped above the 61.8% Fibonacci level and pulled back from the 38.2% Fibonacci level of the entire downward move to retest the breakout, where we can also find the red 21 moving average acting as dynamic support. The buyers may step in here with a defined risk below the 1909 support and target the trendline and the 1934 resistance, where we will likely find sellers waiting to position for another leg lower.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that gold is bouncing from a trendline where we have a good confluence of the 1909 support level, the 4-hour red 21 moving average and the 61.8% Fibonacci retracement level. We should expect buyers piling in here targeting the 1934 resistance. The sellers, on the other hand, may want to wait for the price reaching the 1934 resistance to position for more downside or wait for the price to break below the trendline to start piling in and ride the next bearish wave.
Upcoming Events
This week we have some really important events like the ISM Manufacturing PMI today, the US Jobless Claims and ISM Services PMI on Thursday and finally the main event of the week: the US NFP on Friday. Strong data should lead to a more hawkish interest rates pricing and weigh on gold, while weak data should support gold and push it to the upside.
