In the final part of last week, Gold rallied strongly following an incredible plunge in Treasury yields that led to a fall in real yields and the US Dollar. This has ultimately lifted Gold as it’s inversely correlated with real yields. In the big picture, Gold should remain supported amid rate cuts expectations but in the short-term, given the current aggressive pricing, the main risk is that the economic data starts to surprise to the upside or Fed members push back more strongly against the market’s expectations.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold bounced on the key trendline where we had also the 61.8% Fibonacci retracement level for confluence and rallied into the 2060 level. The buyers should now be targeting the 2080 resistance zone and upon a successful breakout, look forward to a new all-time high. The sellers, on the other hand, will likely step in around the 2080 resistance to position for another correction into the trendline.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price last Friday broke above the downward trendline and extended the rally into the 2060 level before falling back to retest the broken trendline. We now have a strong support zone around the 2042 level where we can find the confluence with the old resistance, the 38.2% Fibonacci retracement level and the red 21 moving average. This is where we can expect the buyers to pile in, in case of another pullback, to position for a rally into the 2080 resistance.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the breakout of the trendline and the following retest. The sellers are likely to pile in around these levels to position for a pullback into the 2042 support and upon a break below it, increase the bearish bets into the major upward trendline around the 2020 level. In case we fail to see another pullback, the buyers will look to increase the bullish bets upon a break above the 2063 high.
Upcoming Events
Tomorrow, all eyes will be on Fed's Waller as the market will be eager to see if he decides to pushback against the aggressive rate cuts expectations. On Wednesday, we will get the US Retail Sales report while on Thursday we will see the latest US Jobless Claims figures. Finally, on Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.
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