Fundamental Overview
Gold remained supported yesterday following an in-line US CPI report and surprisingly weak initial jobless claims. The jobless claims data stole the show as initial claims jumped to a new cycle high and the highest level since 2021.
On further analysis, the claims data might have been just a blip as it was hugely impacted by Texas alone where there was an unusual spike. Nevertheless, the market liked the soft data as it kept the weakening labour market narrative strong and therefore high chances of a more dovish Fed.
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. In the short-term though, hawkish repricing in interest rates expectations will likely keep on triggering corrections.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that the momentum stalled recently as we approach the FOMC policy decision. From a risk management perspective, the buyers will have a better risk to reward setup around the major trendline at the 3,400 level, while the sellers will look for a break lower to extend the drop into the 3,120 level next.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor upward trendline defining the bullish momentum. If we get a pullback into the trendline, we can expect the buyers to lean on it with a defined risk below it to keep pushing into new highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the major trendline around the 3,400 level.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price got rejected by the most recent swing high at the 3,657 level and we have also a minor trendline defining the momentum on this timeframe. The buyers will likely lean on the trendline to target a breakout to the upside, while the sellers will look for a break lower to position for a pullback into the next trendline around the 3,590 level. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the University of Michigan Consumer Sentiment report.
