The Fed hiked interest rates by 25 bps as expected leaving the policy statement unchanged. The market was eager to get some clues on the next policy moves but was disappointed as Fed Chair Powell just reaffirmed their data dependency and kept all the options on the table. Yesterday, the US Jobless Claims beat expectations by a big margin again and sent hawkish vibes across the markets. Gold is inversely correlated with US real yields and therefore it weakened following the data.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold rejected the resistance 1984 and fell into the red 21 moving average, where we are seeing a bounce as the buyers are probably stepping in. The sellers will need the price to fall below the 1934 support to get full control and target the 1805 swing low.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that if we were to get a pullback, we have a good resistance zone around the 1963 level where there is confluence with the 50% Fibonacci retracement level and the red 21 moving average. The sellers are likely to step in here with a defined risk above the level and target the breakout of the 1934 support and eventually the 1805 level. The buyers, on the other hand, will need the price to break above the resistance zone to pile in for a breakout above the 1984 resistance.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that some aggressive sellers are already leaning on the short term 21 moving average and a previous swing level. If this level breaks, the buyers will pile in to target the breakout above the resistance zone, while the sellers will be waiting there to position for a move lower.
Upcoming Events
Today the market will be focused on the US PCE and ECI reports. Given that the market is already looking forward to the next month’s CPI report, we are unlikely to see big moves from the PCE unless there’s some big surprise. In fact, the market is likely to focus more on the ECI as the Fed remains attentive to wage inflation given the strength in the labour market. Higher than expected data should weigh even more on Gold, while lower than expected reading should provide a pullback.