The rally in Gold looks unstoppable as many positive drivers keep pushing the price to new highs. Gold is correlated with real yields and those kept on falling lately due to weakening US data that led to a fall in inflation expectations and Treasury yields. The market might have gone too far too fast though as the rates pricing has reached five cuts in 2024, although they can easily increase if the data worsens even more. The bias remains bullish, and the dips will likely be bought strongly, but watch out for a quick deterioration in the data not followed by a strong Fed reaction as that could make real yields to spike higher and weigh on Gold like it happened in the recent two recessions.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold today spiked higher in the APAC session amid low liquidity. The move got completely reversed soon after with a very ugly reversal candlestick that might be a bad omen for the buyers. Such extreme moves usually happen around short term tops and bottoms, so the buyers might want to wait for at least a pullback into the trendline before piling in again
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have another minor trendline around the 2040 level. The buyers could split their position in half to enter both at the minor and major trendline as we cannot know which level will hold. The sellers, on the other hand, should pile in at every break lower with a break below the major trendline likely triggering a selloff into the 1930 level.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action with the big spike followed by the huge reversal. At the moment, there’s not much to do as the price is basically in no man’s land and both buyers and sellers should wait for the market to come into the key levels before taking new positions. A lot will depend on the economic data this week as we get many top tier US labour market indicators, so keep a close eye on the data.
Upcoming Events
This week we will see lots of US labour market data culminating with the NFP release on Friday. Tomorrow, we have the ISM Services PMI and the US Job Openings reports. On Wednesday, we will get the US ADP data. On Thursday, it will be the time for the US Jobless Claims figures, while on Friday we conclude the week with the NFP report. The playbook should continue to be the same with weak data boosting Gold and strong figures leading to pullbacks.
