On the daily chart below, we can see that the market has switched to a downtrend as depicted by the cross to the downside of the moving averages. The sellers are in control, but the buyers have been fighting quite hard lately as the momentum to the downside has been fading due to the market awaiting March economic data to see if the February data was just a blip due to seasonal factors or the Fed has indeed slowed its rate hike cycle too early.
Gold is sensitive to the direction of real yields as when those go up the price of gold generally falls and vice versa. The market repricing higher interest rates weighed on gold due to hot economic data in February, so if we keep getting strong economic reports in March, gold is likely to fall further.
On the 4 hour chart below, we can see that the selling momentum was fading going into March as depicted by the divergence between the price and the MACD. It will be crucial now to watch the economic data, because technically the price now can rally all the way up to the 1902 level as the trendline was breached.
The moving averages have also crossed to the upside signalling a change in the short-term trend. Today we have the ISM Manufacturing PMI and if the report comes out strong, then this upward move from yesterday may have been just a fakeout, but if the data misses expectations, we should see another rally.
On the 1 hour chart below, we can see more closely the breakout from yesterday. The red long period moving average and the support at 1828/1830 will be the last line of defence for the buyers. If the price falls below the trendline and the support zone, then the breakout would translate into a fakeout and a bigger selloff should follow.
