The Fed members have delivered hawkish comments since the last FOMC meeting as they keep reiterating that two or more rate hikes are expected as long as the data remains strong. In fact, since the last meeting the economic data has been surprising to the upside and that weighed on gold as the market repriced interest rates expectations on the more hawkish side. On Monday though, the US ISM Manufacturing PMI missed forecasts by a big margin and all the components came in contraction. This is something that happened only in recessions, but we will need more weakness in the data to keep the Fed on pause.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold has bounced on the 61.8% Fibonacci retracement level and rallied into the 1934 support turned resistance. We had also the red 21 moving average there and the price has almost perfectly rejected the level. This might be the restart of the downward trend, but we will need to see the data as the market will need weak readings to rally again.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that resistance zone at the 1934 had also some confluence with the 38.2% and 50% Fibonacci retracement levels. The price has now fell below the trendline again, so the pop higher might have been just a fakeout. The moving averages are also crossing to the downside as the bearish momentum prevails.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that there’s not much to do here other than waiting for the data to decide which way to go. At the moment, the price is being rejected by the red 21 moving average and we can expect another push to the downside until the data or some consolidation. The two most clear scenarios are:
- A break above the 1934 resistance supported by a fundamental catalyst should lead to more higher highs with the 1984 resistance being the first target.
- A break below the 1908 fibonacci support should lead to more selling pressure and open the door for a selloff into the 1800 swing level.
Upcoming Events
Today we will see the US Jobless Claims and the ISM Services PMI reports, while tomorrow we will finally get the US NFP data, which might be pivotal for the Fed. Strong data is expected to weigh even more on gold, while weak readings should support prices and lead to more upside.
