The miss in the US CPI report has given Gold some support as the market repriced interest rates expectations on the more dovish side. The US data though kept on surprising to the upside and the latest US Jobless Claims showed yet again that the labour market is still very strong, which is something that keeps the Fed wondering if more rate hikes could be required to bring inflation sustainably back to their target. This is a headwind for Gold, and if we keep seeing good data and the Fed remains hawkish, we could see more lows for the yellow metal.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold has eventually reached the 1984 resistance level where the sellers were waiting to position for another low. The short-term bias now is bullish as the price has broken out of the downward trendline and the moving averages are crossed to the upside. The buyers will need to break above the 1984 resistance to get back full control and target the 2076 high.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the rejection from the 1984 resistance has led to a fall below the upward trendline and the downside crossover of the moving averages. This is a bearish signal and we can expect Gold falling to the 1934 support if the price fails to break above the 1965 level.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a key resistance level at 1965 where the sellers are likely to pile in to extend the fall into the 1934 support. The buyers, on the other hand, will need the price to break above the resistance level to pile in and target the 1984 resistance first, and upon a breakout, the 2076 record high.
Upcoming Events
Lots of top tier economic events are scheduled for this week starting with the US PMIs today. Better than expected data should put some pressure on Gold as the market may reprice interest rates expectations on the more hawkish side. Conversely, lower than expected readings should support Gold as the dovish pricing is likely to increase. Moving on to Wednesday, the Fed is expected to hike by 25 bps although this is already priced in and it’s unlikely to lead to sustained moves. On Thursday, another US Jobless Claims report will show if the labour market is still strong, and if that’s the case, we may see some bearish reaction in Gold, while worse than expected data should provide a tailwind. We conclude the week with the US PCE and ECI reports on Friday.
