Gold has been rising steadily since the last FOMC rate decision where the Fed surprisingly leant on the dovish side and triggered big moves across the markets. The prospect of a rate cut cycle is a bullish driver for Gold given its close inverse relationship with real yields. Unfortunately, the market’s pricing for rate cuts might have gotten a bit too aggressive which could lead to some quick drops if the US data comes out strong in the next few weeks or months. As long as the current market’s narrative holds, we can expect Gold to keep printing new higher highs.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold has been rising steadily since the last FOMC meeting with the price recently reaching the key resistance zone around the 2080 level. The buyers are certainly targeting a new all-time high after the disappointing huge reversal we saw the last time. From a risk management perspective, the buyers will have a much better risk to reward setup around the trendline, although such a drop looks unlikely at the moment unless the data comes out surprisingly strong.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that Gold looks to be trading inside a rising channel with the price bouncing recently on the lower bound of the channel. The buyers piled in to position for a rally into the upper bound of the channel around the 2100 level. The sellers, on the other hand, should wait for the price to break the channel to the downside to confirm a drop into the major trendline around the 2020 level.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the bullish move has already started so late buyers should wait for a pullback instead of chasing the price at the highs. We have a good support zone around the 2068 level where we can find the confluence with the recent swing high, the trendline and the 50% Fibonacci retracement level. That’s where the buyers are likely to step in with a defined risk below the trendline and target the 2100 level.
Upcoming Events
This week is full of key economic data which will culminate with the NFP report on Friday. We begin tomorrow with the ISM Manufacturing PMI and Job Openings and given the recent trends there could be room for disappointment. Later in the day, we will get the release of the FOMC Minutes, but it’s not expected to be market-moving given that it’s three weeks old data. On Thursday, we will have another slate of US labour market data with the release of the US ADP and Jobless Claims figures. Finally, on Friday, we conclude the week with the NFP report and the ISM Services PMI.
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