The war in Israel has given Gold a boost as the precious metal managed to sustain a rally after the upward gap following the outbreak of the war. The real yields and the US Dollar though continue to march higher and that might weigh on Gold especially at these key levels. The US data remains solid, but core inflation continues on the right path which might be another headwind for Gold as the Fed’s higher for longer stance coupled with normalising inflation raises real yields.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold has reached a key resistance zone around the 1880 level where we can find the confluence with the previous support turned resistance, the red 21 moving average and the 50% Fibonacci retracement level. The sellers are likely to step in here with a defined risk above the level to position for another selloff into the lows. The buyers, on the other hand, will want to see the price breaking higher to target the downward trendline first and eventually a breakout.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has already reacted to the resistance zone and fell into the previous swing level before bouncing back up as the buyers stepped in at the red 21 moving average and the support level. If the price falls further and breaks the 1865 support zone, the sellers will have a confirmation of a change in trend and will pile in even more aggressively to extend the drop into the lows.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the whole rally into the resistance zone was diverging with the MACD. This is generally a sign of weakening momentum often followed by pullbacks or reversals. This is adding another layer of confluence for the sellers and increases the chances of a selloff from these levels. If we see another spike higher into the resistance zone, the divergence would become even stronger.
Upcoming Events
Today the only notable event on the agenda is the University of Michigan Consumer Sentiment report although it has lost its market moving ability lately. Only big surprises are likely to have an impact on the market.
See the video below
