Fundamental Overview
Gold has been ranging near a key level as the market awaits a catalyst or key technical breakouts to find some momentum. The bullish bias remains intact though as we got some very good inflation data from the CPI and PPI last week which should support gold in the bigger picture as it will give the Fed more confidence to start cutting rates at some point in the last part of the year.
The latest FOMC decision made things a bit murkier in the short term as it turned out to be a bit more hawkish than expected, although Fed Chair Powell made it clear that their forecasts can change as they remain very data dependent. As of now, it looks like gold have limited downside but lots of upside as inflation abates slowly while risks to the growth picture increase the longer the Fed keeps policy restrictive.
In the short-term, strong US data might weigh a bit on the market, but in the long-term weak data is likely to trigger bigger upside moves.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold has been ranging around a key resistance zone around the 2325 level but maintained the bullish bias. The buyers will need the price to break through some key technical levels on the lower timeframes to increase the upside momentum.
The sellers, on the other hand, will want to see the price breaking below the key support at 2277 to increase the bearish bets into the next support around the major trendline where we can also find the 61.8% Fibonacci retracement level for confluence.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the rangebound price action around the 2325 resistance zone, although the bullish momentum picked up recently with the price now testing the trendline and the 61.8% Fibonacci retracement level.
This is where we can expect the sellers to step in with a defined risk above the trendline to position for a break below the key support with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to gain even more conviction and increase the bullish bets into the 2387 level next.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have the upper bound of the average daily range for today standing right around the trendline. Generally, the price doesn’t extend beyond these levels unless there’s a strong catalyst. If the US Jobless Claims today miss by a big margin, then we might see a breakout, otherwise a pullback is more likely.
Upcoming Catalysts
Today we have the US Housing Starts, Building Permits and the latest US Jobless Claims figures. Tomorrow, we conclude the week with the US PMIs.