Last week, 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. The US Jobless Claims beat expectations once again and sent hawkish vibes across the markets eventually weighing on Gold. The following day though, the US PCE and the Employment Cost Index missed forecasts giving Gold some support.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold rejected the 1984 resistance as the sellers stepped in with a defined risk above it to target a new low. The buyers though, leant on the red 21 moving average as expected to target again a breakout of the resistance.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the selloff following the beat in the US Jobless Claims ended at the daily 21 moving average, and the price bounced into the 1964 resistance zone where we had also the 50% Fibonacci retracement level and the 4 hour red 21 moving average for confluence. The sellers stepped in there with a defined risk above the resistance to target the break below the 1934 support.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the buyers will need to break above the 1964 resistance zone to get more conviction and pile in to target the break above the 1984 level. The last line of defence will be the 1934 support, as a break below that level is likely to give the sellers even more control and increase the bearish momentum.
Upcoming Events
This week we will have many important economic data, beginning tomorrow with the US ISM Manufacturing PMI and the US Job Openings. Moving on to Wednesday, we will see the latest US ADP report. On Thursday, the market will be focused on the US Jobless Claims and the US ISM Services PMI. Finally on Friday, we will get the latest NFP report. Given the Fed’s openness to more rate hikes, strong data should weigh on Gold and vice versa in case the data disappoints.
