Fundamental
Overview
Gold has been ranging near a key level as the market awaits a catalyst or
key technical breakouts to find some momentum. The bullish bias remains intact
though as we got some very good inflation data from the CPI and PPI last week which should
support gold in the bigger picture as it will give the Fed more confidence to
start cutting rates at some point in the last part of the year.
The latest FOMC decision made things a bit murkier in the short term as it turned
out to be a bit more hawkish than expected, although Fed Chair Powell made it clear that their
forecasts can change as they remain very data dependent. As of now, it looks
like gold have limited downside but lots of upside as inflation abates slowly
while risks to the growth picture increase the longer the Fed keeps policy
restrictive.
In the short-term, strong US data might weigh a bit on the market, but in
the long-term weak data is likely to trigger bigger upside moves.
Gold
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that gold has been ranging around a key resistance zone around the 2325 level but
maintained the bullish bias. The buyers will need the price to break through
some key technical levels on the lower timeframes to increase the upside
momentum.
The sellers, on the other
hand, will want to see the price breaking below the key support at 2277 to increase
the bearish bets into the next support around the major trendline where we can also find the 61.8% Fibonacci
retracement level for confluence.
Gold Technical Analysis
– 4 hour Timeframe
On the 4 hour chart, we can
see more clearly the rangebound price action around the 2325 resistance zone,
although the bullish momentum picked up recently with the price now testing
the trendline and the 61.8% Fibonacci retracement level.
This is where we can expect
the sellers to step in with a defined risk above the trendline to position for
a break below the key support with a better risk to reward setup. The buyers,
on the other hand, will want to see the price breaking higher to gain even more
conviction and increase the bullish bets into the 2387 level next.
Gold Technical Analysis
– 1 hour Timeframe
On the 1 hour chart, we can
see that we have the upper bound of the average daily range for today standing right around the
trendline. Generally, the price doesn’t extend beyond these levels unless there’s
a strong catalyst. If the US Jobless Claims today miss by a big margin, then we
might see a breakout, otherwise a pullback is more likely.
Upcoming
Catalysts
Today we have the US Housing Starts, Building Permits and the latest US
Jobless Claims figures. Tomorrow, we conclude the week with the US PMIs.
See the video below
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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