Yesterday, the Fed left interest rates unchanged as expected with basically no change to the statement. The market was fearing some hawkish stuff, but we didn’t get any. In fact, the Dot Plot showed still three rate cuts for this year and the economic projections were all upgraded with growth and inflation higher and the unemployment rate lower. Moreover, during the press conference, Fed Chair Powell didn’t sound hawkish, on the contrary, he was fairly neutral. The reaction was pretty straightforward as real yields fell and Gold rallied.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold bounced on the previous all-time high around the 2142 level and surged to a new high following the Fed decision. From a risk management perspective, the buyers will have a much better risk to reward setup around the trendline at 2080 level, but we will likely need some frightening US inflation data to see the price falling all the way back to that level. For now, the path of least resistance remains to the upside.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price yesterday broke above the counter-trendline and rallied strongly as the buyers piled in aggressively following the Fed decision and the breakout. The price is now a bit overstretched as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have some support at the most recent all-time high level where we can find the confluence of the 38.2% Fibonacci retracement level and the 4-hour 8 moving average. This is where we can expect the buyers to step in with a defined risk below the level to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to position for a drop back into the 2142 level.
Upcoming Events
Today we will get some key economic data as we will see the latest US Jobless Claims figures and the US PMIs. Strong data is likely to weigh on Gold in the short-term, while weak figures should give it a boost.
