Gold has been rising steadily since the December Fed pivot with the rate cuts pricing stretching to elevated levels. This has raised the risk of an unwinding of such expectations if the data came out strong. In fact, that’s exactly what we have seen in the past few days with the US data beating expectations except the US Job Openings which unfortunately are a bit more outdated. This has led to a rise in real yields and the US Dollar further weighing on Gold prices.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold has been falling steadily in the past few days amid stronger US data releases. From a risk management perspective, the buyers will have a good risk to reward setup around the trendline where they will also find the 61.8% Fibonacci retracement level for confluence. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and extend the drop into the 1972 level.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that Gold traded inside a rising channel into the key 2080 resistance zone but the latest leg higher diverged with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. The breakout to the downside confirmed the reversal and the target should now be around the base of the channel at the 2020 level, which is also where we have the 61.8% Fibonacci retracement level and the trendline.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action and we can notice that the recent consolidation has formed what looks like a symmetrical triangle. The price can break on either side of the pattern but follows next is generally a sustained move in the direction of the breakout. This gives us two clear scenarios:
- A break to the upside is likely to lead to a rally into the previous highs.
- A break to the downside should take us to the support zone around the trendline.
Upcoming Events
Today we conclude the week with two important reports. The first one is the US NFP report where the market will be eager to see how the US labour market is faring. The second one will be the US ISM Services PMI which will give us a snapshot of the state of the services sector which makes up 80% of the US economy. Strong data is likely to weigh further on Gold while weak figures should give it a boost.
See the video below