Fundamental Overview
After the breakout of the 2480 resistance, gold eventually extended the gains into the 2532 level as the momentum buyers piled in.
In the big picture, gold should remain supported as real yields fall as we head into the Fed’s easing cycle, but in the short-term strong US data might provide pullbacks along the way.
Tomorrow, we get the Flash US PMIs and in case the data surprises to the upside, it could lead to some weakness in gold, and it will be interesting to see if the market decides to fade it or it will trigger a bigger correction to the downside.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold recently managed to break above the key resistance zone around the 2480 level and extended the gains into the 2532 level as more buyers piled in.
The buyers are now in control and the breakout should give them more conviction to target new highs. The sellers, on the other hand, will want to see the price falling back below the 2480 level to invalidate the breakout and position for a drop into the 2360 level.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have now have a strong support zone around the 2480 level where we can find the confluence of the trendline and the 50% Fibonacci retracement level.
If were to get a pullback into the support, we can expect the buyers to step in with a defined risk below the trendline to position for new highs with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking below the trendline to invalidate the breakout and position for a drop into the 2360 level.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price recently bounced on the minor upward trendline to reach new highs but it’s now trading below it. This might be a signal that the bullish momentum has waned a bit and a pullback into the 2480 support is more likely. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we get the US Jobless Claims figures and the US PMIs. On Friday we conclude with Fed Chair Powell speaking at the Jackson Hole Symposium.
