On the daily chart below, we can see that gold has recently bounced on the strong support zone at the 1934 level where we can find confluence with the 50% Fibonacci retracement level, the trendline and a weekly 21 moving average.
The fall in Treasury yields has also helped gold as the market may now need more strong economic data to price in something more hawkish. Yesterday, the big beat in US Job Openings weighed on gold as the market odds for a June hike jumped to 70%. Even though some Fed members hinted to a June pause, gold has weakened further.
We can see that the bias for now remains bearish as the moving averages are crossed to the downside. In case the price rallies again into the red 21 moving average, we can expect sellers waiting there to target the breakout of the trendline which would open the door for a big fall into the 1800 swing level.
Gold Technical Analysis
On the 4 hour chart below, we can see that the bounce on the 1934 support zone has led the price to break above the downward trendline. This signals that the bearish momentum has weakened and in fact the price was diverging with the MACD falling into the 1934 support. We should now expect gold to reach the 1984 resistance, which is also the lower high of the 4-hour downtrend.
A break above that level would switch the trend to bullish and probably lead to a rally back towards the 2076 high. At the moment, gold has pulled back into the resistance turned support at 1954 and we can see that we also have the red 21 moving average sitting there. We may see a bounce here and a rally into the next resistance.
On the 1 hour chart below, we can see more closely the short-term price action with gold selling off into the 1954 support. As mentioned above, we should find buyers leaning on this level with a defined risk just below it and the 1984 resistance as the first target. The sellers, on the other hand, will want to see the price breaking lower to target again the breakout of the 1934 support.
We have important economic indicators today:
- In gold trading, the US Jobless Claims and ISM Manufacturing PMI are crucial factors to consider.
- The comments of Fed members suggest that positive data may not result in a significant decline in gold prices.
- The forthcoming NFP report and CPI data will exert a greater impact on decision-making.
- On the other hand, negative data could benefit gold as Treasury yields are expected to decline.
- Gold would have more room for growth if Treasury yields decreased.
The upcoming US NFP report will capture everyone's attention tomorrow. If the data reveals positive results along with an exceeding average hourly earnings figure, it is likely to have a detrimental effect on gold. This outcome could prompt market concerns about a potential wage price spiral. On the other hand, if the data is good but falls short of expectations in terms of average hourly earnings, it may not cause too much damage. In the case of bad data though, gold may rally hard and the 2076 high would be easy to reach.
