Fundamental Overview
The markets have been waiting for the US NFP to provide a clear signal for either a 25 or 50 bps cut at the upcoming FOMC meeting, but instead we got a mixed report with some better details under the hood.
The probabilities for a 50 bps cut decreased as a result and they are now standing around 27%. A soft US CPI report tomorrow might increase those probabilities a little bit, but we will still head into the FOMC decision with a 25 bps cut as the most probable scenario.
In the bigger picture, gold should remain supported as real yields fall due to the Fed’s rate cut cycle, but in the short-term, strong or better US data might weigh on the market a bit.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold remains stuck in the range between the 2480 support and the 2530 resistance. We will need a strong catalyst to break out of the range and if it doesn’t come this week, it will definitely come next week with the FOMC decision.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the range between the 2480 support and the 2530 resistance. The market participants keep on “playing the range” by buying at support and selling at resistance waiting for a breakout on either side.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have an interesting zone around the 2506 level where the price reacted to several times in the past couple of weeks. This might act as kind of barometer for the sentiment with aggressive traders positioning for longs on a break above the level and sellers positioning for shorts around the level. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Small Business Optimism Index. Tomorrow, we get the US CPI report. On Thursday, we have the latest US Jobless Claims figures and the US PPI data. On Friday, we conclude the week with the University of Michigan Consumer Sentiment report.
