Gold continues to range as the uncertainty in the market remains at the highest level. In fact, we continue to see selloffs on good data and rallies on weak readings but never a sustained move. The Fed yesterday indicated that another hike might still be in the cards, and it projected to keep rates higher for much longer than the market expected as the Dot Plot showed less cuts in 2024. Higher real yields are bearish for Gold but if the economy deteriorates much faster than anyone expects, we should see real yields coming down and Gold moving up.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold tried to rally above the 1934 resistance but got smacked back down soon after following the FOMC meeting. The price left a long tail on the resistance, which is usually a reversal signal, but a lot will depend on the data. The sellers though are likely to pile in here with a defined risk above the resistance to target the 1893 support. The buyers, on the other hand, will want to see the price to rally back above the resistance to invalidate the bearish setup and start targeting the 1984 resistance.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely what could end up being a fakeout. The price made a new lower low following the FOMC meeting and the moving averages have crossed to the downside. This might be an early signal of another selloff into the support incoming as the market structure turned from bullish to bearish.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we had a divergence with the MACD right when Gold was trying to break out. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the support zone around the 1923 level will be key as the buyers are likely to pile in here with a defined risk below the level to target a new high, while the sellers will look for a break lower to position for a selloff into the 1893 support.
Upcoming Events
The week is drawing to a close, but we still have a couple of key economic releases ahead. Today, the main event will be the US Jobless Claims report as the labour market data remains very important for the Fed and the market. Tomorrow, we will see the latest US PMIs data which is expected to be market moving. Strong data is likely to weigh on Gold while weak reading should support it.
