After coming off the boil in trading last week, gold is in a bit more of a consolidative mood now. Buyers are able to hold price above $2,300 and in search of a third straight day of gains. Still, this is only a bit part recovery from the drop from above $2,400 on 19 April. We're seeing gold trade around $2,340 today but what is the chart saying?
At current levels, gold is seeing price trade in between the 100 (red line) and 200-hour (blue line) moving averages. That suggests the near-term bias is more neutral with traders looking like they are respecting the above technical boundaries.
The dollar itself is also in a state of flux as it did little to impress after the US Q1 GDP and PCE price data last week. So, the greenback is not really pushing much higher after the early gains in April. And for gold, the easing of geopolitical tensions is one factor contributing to the pullback last week. But also as buyers are seen cooling off, following a surging round of gains since March. I mean, in April itself gold is still up by nearly 5% so that says a lot.
But for now, we are seeing traders duke it out in the near-term. Break below the 100-hour moving average and sellers will regain control. However, they will need to firstly look for a stronger push under the $2,300 mark. A daily close below that will be much needed to reaffirm any further downside, at least in the short-term.
As for buyers, break above the 200-hour moving average and the near-term bias will shift to being more bullish again. And that could invite a retest of the $2,400 mark once more.
For trading this week, the key catalyst will be the upcoming FOMC meeting. It's all about the Fed outlook and while this should be more or less a placeholder meeting, traders will scrutinise Powell's words for any clues to work with.
As things stand, Fed funds futures are pricing in ~34% odds of a July move and ~78% odds of a September move. The total rate cuts priced in for the year is roughly 36 bps. How that changes will be the main driver for gold price action this week. All that before we get to the US jobs report on Friday.
