After some erratic price action following the US data release on Friday, Gold found some footing as the buyers started to pile in with more conviction after a key breakout and the US data setting aside the inflation fears a little. Given the lack of data this week, we might see the market continuing to trade based on the Friday’s numbers into the US CPI next week.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold recently fell below a key trendline that was defining the bullish momentum that started from the lows around the 2000 level. From a risk management perspective, the buyers will have a much better risk to reward setup around the 2150 level where there’s also another major trendline for confluence. The US data on Friday might have invalidated the bigger correction for the time being, so the sellers will likely need to wait for another catalyst to push the price lower.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price broke out of the downward trendline that was defining the short term bearish trend. The buyers are starting to pile in with more conviction and a break above the 2320 high should trigger a stronger rally into the 2352 swing level. That’s where we will likely find the sellers defending the level and stepping in with a defined risk just above it to position for a drop into new lows. A break above that level should technically invalidate the bearish setup and turn the short-term trend around.
Upcoming Catalysts
This week is pretty bare on the data front with just the US Jobless Claims on Thursday and the University of Michigan Consumer Sentiment survey on Friday being the only notable releases. It’s unlikely that they will change the market’s expectations that much, so the price action might remain tentative heading into the US CPI next week but with a slightly bullish bias.