The job gains
have been much higher than the estimated breakeven rate lately. The
unemployment rate fell to an unrounded 4.29% vs 4.33% in the prior month.
Following the NFP report, the market fully priced in a rate hike by
year-end with the total tightening standing at 30 bps right now. We can now
expect the Fed to drop the easing bias at the upcoming meeting, but the focus
will be mostly on the dot plot and forward guidance. Even though a rate hike is
now fully priced in, if the Fed endorses the market pricing, it will
effectively confirm that the bias has now shifted to tightening and might trigger
another selloff in gold.
This week, the most important event will be the US CPI report release on Wednesday
(barring a surprising breakthrough in US-Iran negotiations). The question for
markets is now when and how many rate hikes the Fed might deliver by year-end. Upside
surprises would be seen as more hawkish and will likely weigh further on gold
prices. Conversely, lower than expected figures should alleviate some of the most
hawkish fears and might trigger a relief rally in the short-term.
GOLD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold is approaching the major upward trendline. If the price gets
there, we can expect the buyers to lean on the trendline with a defined risk
below it to position for a rally into the major downward trendline. The
sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the 3,885 level next.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we can
see the price broke below the key 4,350 level following the hot NFP number and extended
the drop into new lows. From a risk management perspective, the sellers will
have a better risk to reward setup on a retest of the support now turned
resistance around the 4,350 level. The buyers, on the other hand, will want to
see the price rising back above the resistance to extend the pullback into the
minor downward trendline next.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we can
see the NFP triggered a break below the 4,425 support with more sellers piling
in to extend the drop into new lows. There’s not much else we can add here as
the resistance around the 4,350 level and the major upward trendline remain the
key short-term levels. On Wednesday, we have the US CPI
report. On Thursday, we get the latest
US Jobless Claims figures and the US PPI report
