The rise in US real yields coupled with a strong US Dollar have been weighing on Gold and we saw the yellow metal breaking the June low threatening a selloff towards the 1805 level. This week we got some bad news first from the PBoC which cut rates by less than expected and then from the PMIs yesterday that point to a weaker global growth going forward. Treasury yields fell as the market is starting to err more on the dovish side and Gold got a lift.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold eventually broke below the June low but rallied back above the level soon after. We saw a strong rally as more negative news started to filter through and the price reached the red 21 moving average. This is where we can expect some sellers coming into the market with a defined risk above the moving average and target another break below the June low.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we’ve been diverging with the MACD for quite a while coming into the 1893 support. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, as the price broke above the trendline we got a reversal, and the buyers are now eyeing the 1934 resistance. That’s also where we should find the sellers leaning on the level with the 50% Fibonacci retracement level for confluence.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor divergence with the MACD right when the price is approaching the 38.2% Fibonacci retracement level. If we get a pullback, the buyers should lean on the trendline and the swing low support around the 1914 level with a defined risk below the trendline and target a break above the 1934 resistance. The sellers, on the other hand, will want to see the price breaking below the trendline to pile in and target a break below the 1893 support.
Upcoming Events
Today we have the US Jobless Claims, and the market will want to see if the labour market remains strong or starts to show signs of weakness. Strong readings should keep the hawkish expectations steady and weigh on Gold, while weak data should support the yellow metal as we are likely to see a weaker US Dollar and lower Treasury yields. Tomorrow we will hear from Fed Chair Powell who is expected to just repeat their data dependency and keep all the options on the table.
