The miss in the US CPI report led to a big upside move in Gold as expectations of less hikes and earlier rate cuts supported the precious metal. Unfortunately, there are also headwinds for Gold coming from strong data like the US labour market and the consumer sentiment. In fact, the Fed is not yet confident in letting it go on the tightening side as we heard from Fed’s Waller that a hike in July is a done deal, and we may even get another one already in September.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that the 61.8% Fibonacci retracement level stalled the fall in Gold where the price bounced, eventually breaking above the downward trendline. The miss in the US CPI report has also led to a break above the 1934 resistance and the moving averages are now crossed to the upside. The bias is bullish, and the buyers should be eyeing the 1984 resistance next.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that if we get a pullback, the buyers should lean on the black trendline where we can also find the 38.2% Fibonacci retracement level with a defined risk below the trendline and target the 1984 resistance. The sellers, on the other hand, will want to see the price breaking below the 1934 support to pile in and target a new low.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor support around the 1950 level defined by the 38.2% Fibonacci retracement level of the rally since the US CPI miss. Aggressive buyers may be already piling in here to target the 1984 resistance. More conservative buyers may wait for the price to take out the counter trendline and the moving averages to crossover before piling in and target the resistance.
Upcoming Events
This week the main events are the US Retail Sales tomorrow and the US Jobless Claims on Thursday. Strong readings may be a headwind for Gold as the Fed should keep hiking despite the miss in the US CPI last week as Fed’s Waller also noted that one report doesn’t make a trend. Conversely, if the data misses expectations, the market’s expectations for less hikes and even earlier rate cuts should support Gold.
