Gold has been rising steadily since the December
Fed pivot with the rate cuts pricing stretching to elevated levels. This has
raised the risk of an unwinding of such expectations if the data came out
strong. In fact, that’s exactly what we have seen in the past few days with the
US data beating expectations except the US Job Openings which unfortunately are
a bit more outdated. This has led to a rise in real yields and the US Dollar
further weighing on Gold prices.
Gold Technical Analysis –
Daily Timeframe
Gold Daily
On the daily chart, we can see that Gold has been
falling steadily in the past few days amid stronger US data releases. From a
risk management perspective, the buyers will have a good risk to reward setup
around the trendline where
they will also find the 61.8% Fibonacci retracement level
for confluence. The
sellers, on the other hand, will want to see the price breaking lower to
invalidate the bullish setup and extend the drop into the 1972 level.
Gold Technical Analysis – 4
hour Timeframe
Gold 4 hour
On the 4 hour chart, we can see that Gold traded
inside a rising channel into the key 2080 resistance zone but
the latest leg higher diverged with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. The breakout to the downside confirmed the reversal and the target
should now be around the base of the channel at the 2020 level, which is also
where we have the 61.8% Fibonacci retracement level and the trendline.
Gold Technical Analysis – 1
hour Timeframe
Gold 1 hour
On the 1 hour chart, we can see more
closely the current price action and we can notice that the recent
consolidation has formed what looks like a symmetrical
triangle. The price can break on either side of the pattern
but follows next is generally a sustained move in the direction of the
breakout. This gives us two clear scenarios:
- A break
to the upside is likely to lead to a rally into the previous highs. - A break
to the downside should take us to the support zone around the trendline.
Upcoming Events
Today we conclude the week with two important
reports. The first one is the US NFP report where the market will be eager to
see how the US labour market is faring. The second one will be the US ISM
Services PMI which will give us a snapshot of the state of the services sector
which makes up 80% of the US economy. Strong data is likely to weigh further on
Gold while weak figures should give it a boost.
See the video below