Gold has jumped back strongly last week following the surprisingly dovish FOMC decision where the Fed increased the rate cuts expected in 2024 to three and Fed Chair Powell delivered some dovish comments. Last Friday, the comments from Fed’s Williams triggered a drop in Gold as he pushed back a little against the aggressive rate cuts pricing for 2024. In the bigger picture, the fall in real yields is a bullish driver for Gold and as we head into the rate cut cycle Gold should remain supported.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold recently broke below the trendline and extended the selloff from the all-time high to the 1973 level. The price bounced back strongly following the surprisingly dovish FOMC decision and retested the broken trendline that acted as resistance. The sellers stepped in with a defined risk above the trendline to position for a drop into the 1930 swing level 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 that the sellers had also the confluence with the 38.2% Fibonacci retracement level of the entire selloff from the all-time high. The price is now bouncing on the red 21 moving average as the buyers are starting to tentatively fade the last Friday’s drop caused by some Fed speakers where they pushed back a little on the aggressive market’s rate cut pricing. A break below the moving average should see the sellers increasing their bearish bets and drive the price into the 1930 level.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that Gold formed a range after the big rally following the FOMC decision. That range got broken last Friday as the price fell below the 2030 support and what we are seeing right now might just be a retest of the broken support before another selloff. That’s why what happens around the 2030 level will likely decide where Gold will go next:
- A break to the upside should invalidate the bearish setup and see the buyers increasing the bullish bets into new highs.
- A rejection and a new lower low will likely lead to a drop into the 1930 level.
Upcoming Events
This week is a bit empty on the data front as we head into the Christmas holidays. On Wednesday, we have the US Consumer Confidence report. On Thursday, we get the latest US Jobless Claims data, while on Friday we conclude the week with the US PCE report. Strong data is likely to weigh on Gold while weak figures should support it.
See the video below
