The NFP report on Friday despite missing slightly expectations for the first time after 14 consecutive beats, didn’t change the market’s expectations about the next 25 bps rate hike as the other parts in the report were still solid with average hourly earnings even ticking higher. Now the market is focused on the US CPI report on Wednesday and that might change the pricing and thus lead to some big moves in Gold.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold got stuck in range between the 61.8% Fibonacci retracement level and the 1934 resistance level where we can also find the red 21 moving average for confluence. The bias remains bearish as the Fed is still seen hiking interest rates two or more times this year if we don’t see a deterioration in the economic data. In case we see a break to the downside, the sellers will target the 1805 level, while a break to the upside is likely to lead to a rally into the 1984 resistance first and then the 2076 high.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently broke out of the trendline that was defining the bearish trend. Now the buyers will need to break above the 1934 resistance to get back control and target the 1984 resistance. The sellers, on the other hand, are likely to lean on that resistance to position for more downside and target the break below the 61.8% Fibonacci retracement level to extend the fall into the 1805 level.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the choppy price action of the last few weeks as the market is uncertain on the next path for interest rates. The US CPI report on Wednesday will probably decide where the market will go for the following weeks, but the levels are clear:
- A break above the 1934 resistance is likely to cause a rally into the 1984 resistance.
- A break below the 61.8% Fibonacci retracement level should see the sellers taking the price towards the 1805 level.
Upcoming Events
This week will be all about the US CPI report on Wednesday. A miss to the expected numbers, especially on the core side, should lead to a rally in Gold as the market will price out the hawkish expectations and even bring forward rate cuts bets. On the other hand, a beat to the forecasts is likely to cause a more hawkish repricing in the expectations and lead to more downside for Gold. After the CPI report we will see the US Jobless Claims on Thursday and the University of Michigan Consumer Sentiment on Friday.
