Fundamental
Overview
Gold has been on a steady
rise since bouncing on a major trendline and the market increasing the easing
bets for the Fed. The momentum waned a bit though as market participants await
the NFP release before the US holiday tomorrow.
In the bigger picture, gold
remains in an uptrend as real yields will likely continue to fall amid Fed
easing and just a hawkish repricing in rate cuts expectations could trigger
corrections in the short term.
The economic data will be
particularly important for the market as Fed members sound inclined to cut
earlier than expected or even more if the inflation data remains soft or the
labour market data deteriorates further. The sellers might want to wait
for the price to come into the 3438 resistance or break below the major
trendline before positioning for new lows with better setups.
Gold Technical Analysis
– 4 hour Timeframe
On the 4 hour chart, we can
see that the price broke above the minor downward trendline that was defining
the bearish momentum. The buyers piled in on the break, but the momentum waned
as traders await the NFP release.
From a risk management
perspective, the buyers will have a better risk to reward setup around the most
recent swing low at 3327 to position for a rally into new highs. The sellers,
on the other hand, will look for a break lower to start targeting the major
upward trendline and eventually a breakout.
Gold Technical Analysis
– 1 hour Timeframe
On the 1 hour chart, we can
see that we have a bit of a consolidation now trading into the NFP report. The
volatility is generally high and spikes are very common, so the technical
levels might not be respected at all.
Nonetheless, with soft data
we can expect the buyers to pile in more aggressively as traders increase the
rate cuts bets, while a hot report could take us back to the major trendline as
the market pares back the easing expectations
