Gold eventually erased all the gains from last week's short-squeeze and it's now trading near key levels ahead of the US September NFP and the US Jobless Claims data.
Strong data should keep weighing on gold as it would keep the market speculating on rate cuts pause, while weak data is likely to support the precious metal as it would give the Fed more reasons to keep cutting rates.
In the bigger picture, gold should remain in an uptrend as real yields will likely continue to fall amid the Fed’s dovish reaction function. But in the short term, a further hawkish repricing in interest rate expectations should keep weighing on the market.
On the 4 hour chart, we can see that we have a strong support zone around the 4020 level where there's also the trendline for confluence. If the price gets there, we can expect the buyers to step in with a defined risk below the trendline to position for a rally into the 4150 resistance. The sellers, on the other hand, will want to see the price breaking lower to pile in for a drop into the 3820 level next.
On the 1 hour chart, we can see that we have a counter-trendline defining the current pullback into the support. The sellers will likely continue to lean on this trendline with a defined risk above it to keep pushing into new lows, while the buyers will look for a break higher to increase the bullish bets into the resistance.
