Fundamental Overview
Gold has been on a steady rise since bouncing on a major trendline and the market increasing the easing bets for the Fed. The momentum waned a bit though as market participants await the NFP release before the US holiday tomorrow.
In the bigger picture, gold remains in an uptrend as real yields will likely continue to fall amid Fed easing and just a hawkish repricing in rate cuts expectations could trigger corrections in the short term.
The economic data will be particularly important for the market as Fed members sound inclined to cut earlier than expected or even more if the inflation data remains soft or the labour market data deteriorates further. But if the data starts to come out on the hotter side, then a hawkish repricing should weigh on the market.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold continues to edge higher after the strong bounce on the major upward trendline where the buyers stepped in to position for a rally into a new all-time high. The sellers might want to wait for the price to come into the 3438 resistance or break below the major trendline before positioning for new lows with better setups.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke above the minor downward trendline that was defining the bearish momentum. The buyers piled in on the break, but the momentum waned as traders await the NFP release.
From a risk management perspective, the buyers will have a better risk to reward setup around the most recent swing low at 3327 to position for a rally into new highs. The sellers, on the other hand, will look for a break lower to start targeting the major upward trendline and eventually a breakout.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a bit of a consolidation now trading into the NFP report. The volatility is generally high and spikes are very common, so the technical levels might not be respected at all.
Nonetheless, with soft data we can expect the buyers to pile in more aggressively as traders increase the rate cuts bets, while a hot report could take us back to the major trendline as the market pares back the easing expectations. The red lines define the average daily range for today.
Upcoming Catalysts
Today, we conclude with the US NFP, the US Jobless Claims and the US ISM Services PMI before the US holiday tomorrow.
