Gold caught a decent jump from the Fed yesterday as it rose from $2,300 to $2,328. The move was faded quite quickly before a slow push to $2,325 again in Asia today. But sellers have been on the ball in keeping the downside pressure since Friday last week. They have been stepping in close to the 200-hour moving average (blue line):
That is the case again in the last few sessions, with price action now falling back past the 100-hour moving average (red line) as well. That suggests the near-term bias is more bearish with gold looking back towards the $2,300 mark.
The low yesterday at $2,281 will be one to watch in terms of short-term support below the figure level.
So, what’s next for gold?
As we look towards the latter stages of the week, it’s all about US data tomorrow. We have the jobs report in focus but also the ISM services PMI report after as well. Those will be key trigger points for both buyers and sellers to act upon, depending on what we get from the releases.
In the context of this week, gold is looking to post back-to-back weekly drops for the first time since February. It is down roughly 1.4% this week but that is before we get to the data set tomorrow.
I won’t argue that we are overdue a retracement/correction in gold after the run higher in the last two months. But in the bigger picture, gold still has a lot going for it especially since traders have already ran back a big chunk of Fed rate cuts so far this year. So, if the Fed is to finally set the path alight again in the months ahead, that will be a structural tailwind for gold.
This article was written by Justin Low at www.forexlive.com.
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