Last week, the US CPI came basically in line with expectations, but the good news is that the Core M/M reading once again printed at 0.2% or 0.16% unrounded. The not so good news is that the US Initial Claims spiked higher coming at 248K vs. 230K expected, but Continuing Claims remained strong. We have already seen Claims spiking higher in the past months, but the overall picture remains positive for now. The long-term inflation expectations in the University of Michigan report ticked lower, so on the data side the week was positive. Overall, we should have seen Gold rally with such data as the market priced out further rate hikes expectations and some Fed members even started to talk about rate cuts in early 2024.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that the selloff from the 1984 resistance extended past the key 1934 support and the sellers are now eyeing the 1893 low. A break below the low would open the door for a big fall into the 1805 swing low.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price is diverging with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. The buyers can either wait for the price to reach the 1893 low to step in with a tight risk and target the 1984 resistance or wait for a break above the trendline to confirm the reversal and ride the bullish wave.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have what looks like a falling wedge, which is generally a reversal pattern. The price will need to break above the trendline and the 1921 swing high to confirm the reversal though and give the buyers more conviction for further upside. The sellers, on the other hand, are likely to pile in at the trendline to target the 1893 low and ultimately a break lower.
Upcoming Events
This week is a bit empty on the data front, but we will have two key economic releases, nonetheless. Tomorrow, we will see the latest US Retail Sales report and we can expect gold to rally in case we see a miss and fall in case we see a beat. On Thursday, we will have the US Jobless Claims data release. This is likely to be the main report of the week as the market remains sensitive to the labour market data. If we see a miss, Gold is likely to rally as the market will price out even more the chances of further hikes, but if we see a beat, we should see the precious metal falling further.