Gold has been falling steadily in the past few weeks as the market continued to reprice the aggressive rate cuts expectations following a slate of strong US economic data and the pushback from Fed members. All of the above strengthened the US Dollar and lifted real yields which are inversely correlated to Gold prices. In the big picture, Gold should remain supported as we head into the rate cut cycle, but in the short term the repricing of expectations will likely drive the market lower. For the best results, traders should wait until the short-term picture aligns with the long-term one.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold broke the key trendline around the 2020 level but managed to reverse the drop soon after ending the week above it. This might have been a fakeout, which is generally a reversal pattern, but the buyers will need the price to break above the downward trendline to change the bearish bias and start targeting another all-time high.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke below the key support zone around the 2020 level but eventually managed to rally back above it. The buyers might take the recent pullback as an opportunity to increase the bullish bets into the downward trendline, while the sellers will want to see the price breaking lower again to invalidate the bullish setup and position for a drop into the 1972 level.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor upward trendline right around the key support zone where we can also find the confluence with the 61.8% Fibonacci retracement level. This is where the buyers are piling in to position for a rally into the major downward trendline and will likely increase the bullish bets in case the price breaks above the trendline. The sellers, on the other hand, will likely lean on the minor downward trendline where they will find the 21 moving average for confluence to position for a break below the support zone and target the 1972 level. Alternatively, they can also wait for a break below the minor upward trendline to increase the bearish bets into new lows.
Upcoming Events
This week is a bit more tranquil on the data front with the major releases scheduled for the final part of the week. We begin on Wednesday with the US PMIs while on Thursday we will see the Advance US Q4 GDP and the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the US PCE report. Strong data is likely to weigh on Gold while weak figures should support the market.
See the video below
