Fundamental Overview
Gold has been rallying steadily this week since bouncing from the bottom of the recent range. The soft US Job Openings on Wednesday gave it the tailwind to push into the key resistance around the 2530 level.
This move has been driven by falling real yields as the softer US data caused the market to position more dovishly into the NFP release. This puts the recent rally in gold at risk in case the NFP report comes out better than expected as real yields will reverse the recent drop.
In the bigger picture, gold should remain supported as real yields fall due to the Fed’s rate cut cycle, but in the short-term, strong US data might weigh on the market a bit.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold eventually bounced on the support zone around the 2480 level. We are now trading near the top of the range where we can expect the sellers to step in with a defined risk above the resistance to position for a break below the support. The buyers, on the other hand, will want to see the price breaking above the resistance to increase the bullish bets into new highs.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the range between the 2480 support and the 2530 resistance. The market participants kept on “playing the range” by buying at support and selling at resistance and today’s NFP release will likely trigger a breakout on either side.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that once the price broke above the downward trendline more buyers piled in to position for a rally into the resistance. Today’s NFP report is the most important of the year, so the market impact will likely be huge.
The red lines define the average daily range for today, but I extended the range manually as the indicator is based on the previous 5 days where we just stayed in the range. Therefore, don’t rely too much on the average daily range today.
Upcoming Catalysts
Today we conclude the week with the US NFP report where the consensus sees 160K jobs added and a 4.2% unemployment rate.
