Fundamental Overview
The Fed this week finally started its easing cycle and decided to do it with a 50 bps cut. The market was already leaning towards a 50 bps move, so it wasn’t a surprise.
The larger cut was framed as kind of an “insurance” cut with the dot plot showing two more 25 bps cuts by the end of the year and less than the market expected in 2025.
Gold weakened initially but eventually shot higher as inflation expectations rose faster than nominal yields driving real yields lower. The market is still pricing a 41% chance of a 50 bps cut at the next meeting and 73 bps of easing by year-end.
Watch the US data in the coming weeks as stronger data will likely trigger a correction, while weak releases should keep supporting the market.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold rallied to a new all-time high following the Fed’s decision. We have a trendline defining the current bullish momentum. If we get a pullback, we can expect the buyers to lean on trendline to position for new highs, while the sellers will look for a break lower to pile in for a drop into the 2482 level.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke through the previous all-time high which was acting as resistance and extended the rally above the 2600 level. The resistance turned now into a support and if we get a pullback, we can expect the buyers to lean on it with a defined risk below it to position for the continuation of the uptrend. The sellers, on the other hand, will want to see the price breaking lower to pile in for a drop into the trendline.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another minor trendline defining the bullish momentum on this timeframe. The buyers will likely keep on leaning on it to position for new highs, while the sellers will look for a break below the trendline and the support to target a drop into the 2540 level. The red lines define the average daily range for today.