Despite strong economic data and the rise in real yields and the US Dollar, Gold managed to resist and hold above the 2000 level. In the big picture, rate cut cycles are generally positive for Gold as real yields and the US Dollar fall, but in the short term the repricing of the aggressive rate cuts expectations is putting a lid on the price. In fact, as long as the data continues to surprise to the upside, we will likely continue to see lower lows going forward, but as soon as the tide turns, we should see a new all-time coming pretty quickly.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold has pulled back into the key downward trendline where we can also find the confluence of the broken upward trendline and the red 21 moving average. This is where the sellers will likely step in with a defined risk above the trendline to position for a drop into the 1972 level. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into the 2080 resistance.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have some more confluence around the trendline with the Fibonacci retracement levels acting as resistance. If the buyers fail to break out above the trendline and the price falls, they will have another opportunity around the 2015 support zone. The sellers, on the other hand, will want to see the price breaking below the support to increase the bearish bets into the 1972 level.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price bounced again on the 2015 support and rallied all the way back to the recent highs around the 2035 level. It’s unlikely to see a breakout today given that we have many risk events ahead and the market might want to wait for some catalyst to decide where to go next.
Upcoming Events
This week is going to be a really busy one with the FOMC rate decision and lots of economic data on the agenda. We begin tomorrow with the US Job Openings and the US Consumer Confidence reports. On Wednesday we will see the US Employment Cost Index and the ADP data before the FOMC rate decision later in the day. On Thursday, we get the latest US Jobless Claims figures and the ISM Manufacturing PMI. Finally, on Friday, we conclude the week with the US NFP report. Strong data is likely to weigh on Gold while weak figures should give it a boost.
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