Last Friday, the NFP report crushed even the highest estimates showing that the labour market remains pretty solid. Gold initially dipped as the odds for another rate hike rose but given the lower average hourly earnings and the unchanged unemployment rate, the market reversed the move and Gold rallied. Today, Gold opened higher as over the weekend Hamas launched a massive attack against Israel leading to the latter declaring war and invoking “Article 40 Aleph” for the first time since 1973.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold bounced near the 1805 support after the strong NFP report which should have weakened it given that the Fed might raise rates again as the labour market remains pretty strong. The market might have focused more on the lower average hourly earnings and the unemployment rate though. Nevertheless, a pullback was due given the huge selloff following the FOMC meeting. Today, Gold opened higher following the news over the weekend and the resistance around the 1880 level now looks like a decent target.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that last Friday the price broke out of the downward trendline and the consolidation around the 1805 support. This should be a bullish signal and the buyers piled in to target the 1880 resistance where we can also find the confluence with the 50% Fibonacci retracement level. From a risk management perspective, the buyers would be better off to wait for a pullback into the 1834 level where we have also the 50% Fibonacci retracement level for confluence.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the bullish setup around the resistance turned support at the 1834 level. We can also see that we have the red 21 moving average for confluence around the support level. This should be a good level for the buyers to lean on with a defined risk below the low. The sellers, on the other hand, will want to see the price breaking lower to position for further downside and target the break of the 1805 support.
Upcoming Events
This week we have some important inflation reports. On Wednesday, we will get the US PPI data and later in the day the FOMC Meeting Minutes. On Thursday, it will be the time for the main release of the week, that is the US CPI report, and at the same time we will see the latest Jobless Claims figures. Finally, on Friday we will get the University of Michigan Consumer Sentiment report. Strong data is likely to weigh on Gold, while weaker readings should support it.
