The quick rise in the US real yields and the US Dollar in August weighed a lot on Gold and the yellow metal sold off with very shallow pullbacks along the way. Recently, the less hawkish comments from Fed members and the miss in the US PMIs gave Gold some support as the Treasury yields and the USD retreated. Going forward it’s going to be all about the data as strong readings should keep weighing on Gold while a deterioration in the data should support it.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold has avoided a complete breakdown as it rallied back above the 1893 low soon after breaking below it. The price is now testing the red 21 moving average and it’s struggling to break through as the sellers are probably leaning on the moving average to position for more downside.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that after the long divergence with the MACD coming into the 1893 low, the price broke above the downward trendline confirming a reversal and rallied towards the 38.2% Fibonacci retracement level. This is where the sellers are piling in with a defined risk above the 1934 resistance to position for another selloff below the 1893 support. If the price extends all the way up to the 1934 resistance, we should see the sellers piling in even more aggressively as they will have an even better risk to reward setup.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we recently got a quick selloff from the 38.2% Fibonacci retracement level during the Fed Chair Powell’s speech and then a quick turnaround as the buyers leant on the support around 1904 to position for a rally into the 1934 resistance. The price action now might be messy, but the key levels to watch will be the Fibonacci retracement levels and the 1904 support.
Upcoming Events
This week is an important one given that we will see many key labour market data, including the US NFP, before the next FOMC meeting. We start tomorrow with the US Consumer Confidence and the US Job Openings. On Wednesday, we have the US ADP report. Moving on to Thursday, we will have the US Jobless Claims and the US PCE data. Finally, we conclude the week with the US NFP and the ISM Manufacturing PMI on Friday. Although the Fed keeps all the options on the table, it’s also leaning more towards a pause in September, so we will need strong data to make the market to expect a hike at the upcoming meeting. In case we see weak readings, Gold is likely to rally and vice versa if we get strong figures.
