The rise in US real yields coupled with a strong US Dollar is weighing a lot on Gold. The precious metal can’t even find support from the economic data as we keep getting strong releases that raise the risk of more rate hikes from the Fed. All else being equal, Gold is likely to remain in a downtrend and new lows should be expected.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold broke below the June low at 1893 and this has opened the door for a fall into the 1805 swing level. The trend remains bearish as the price keeps printing lower lows and lower highs and the moving averages are crossed to the downside. We can expect the sellers to pile in at every pullback.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we keep diverging with the MACD which is a sign of weakening momentum often followed by pullbacks or reversals. In this case, we keep getting pullbacks that are almost perfectly rejected by the red 21 moving average as the sellers keep piling in. The buyers will need the price to break above the trendline to have more conviction for a bigger pullback.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action and how Gold trades perfectly within a falling channel. A break below the recent low at 1885 should see the price falling quickly into the lower bound of the channel where we might see another bounce into the upper bound of the channel. As long as we stay within this channel the sellers will remain in control.
Upcoming Events
This week is pretty bare on the data front as we only have the US PMIs on Wednesday and the US Jobless Claims on Thursday. The rise in Treasury yields and the US Dollar is weighing a lot on Gold, so we will likely need to get bad data to see a bigger pullback as good data should keep the precious metal on the backfoot. This is also the Jackson Hole Symposium week so we will hear again from many Fed officials with the Fed Chair Powell set to speak on Friday.