Gold Technical Analysis

Yesterday, we got another hot US CPI report
which pushed rate cuts expectations further out with the market now pricing in
less rate cuts than the Fed’s dot plot. The real yields and the US Dollar
rallied strongly as a consequence which put downward pressure on Gold. The
usual inverse correlation with real yields broke down recently with talks of
heavy central bank buying being the possible culprit.

It could have been just simply a momentum trade
though, and the CPI report might have been the catalyst that marked the top. In
the big picture, Gold should remain supported as we head into the easing cycle,
but in the short-term the hawkish repricing in rate cuts expectations should
weigh on Gold, especially if rate hikes start to be put on the table at some
point.

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Gold have been
rallying into new all-time highs with almost no pullbacks along the way. From a
risk management perspective, the buyers will have a much better risk to reward
setup around the trendline where
they will also find the red 21 moving average for confluence. The
sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the next major trendline around the 2100 level.

Gold Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the latest move
higher is diverged with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it could be a signal for a pullback into the trendline
where we can also find the 50% Fibonacci retracement level
for confluence. The sellers should pile in on a break below the minor trendline
to position for a drop into the trendline around the 2267 level. The buyers, on
the other hand, will likely step in here with a defined risk below the minor
trendline to position for a rally into new highs.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see that we
have a counter-trendline around the 2352 level marked by the green box. If the
price were to break above the counter-trendline, the buyers will regain control
and we will likely see a rally into a new all-time high. Conversely, if the
price were to break below the cluster of minor trendline around the 2334 level,
the sellers should pile in more aggressively and extend the drop into the 2267
level.

Upcoming Events

Today we get the US PPI report and the latest US
Jobless Claims figures. Tomorrow, we conclude the week with the University of
Michigan Consumer Sentiment survey. Strong data is likely to weigh on Gold,
while weak figures should give it a boost.

See the video below

This article was written by FL Contributors at www.forexlive.com.