Gold Technical Analysis

Fundamental
Overview

The US PMIs yesterday came
out much better than expected sending Treasury yields and the US Dollar higher.
Higher real yields raise the opportunity cost of holding gold, so there’s generally
an inverse correlation between the two. In fact, we saw gold prices falling following
the data release and at the moment there’s no strong reason to buy the dip as the
markets question if there will be rate cuts at all this year.

Gold Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that gold has been on a free fall since setting the new all-time high at
2450. There’s a good support
zone around the 2278 level where we can also find the 38.2% Fibonacci
retracement level for confluence.

That’s where we can expect
the buyers to step in with a defined risk below the support to position for a
rally into a new all-time high. The sellers, on the other hand, will want to
see the price breaking lower to increase the bearish bets into the trendline
around the 2150 level.

Gold Technical
Analysis – 1 hour Timeframe

On the 1 hour
chart, we can see that we have a good resistance around the 2371 level where there’s
the 38.2% Fibonacci retracement level for confluence. That’s where we can
expect the sellers to step in with a defined risk above the resistance to position
for a break below the 2278 support with a better risk to reward setup.

Alternatively, if
the bearish momentum from the US PMIs remains strong, the sellers will likely
increase the bearish bets as soon as we break below the recent low at 2330. The buyers, on the other hand, will likely buy the dip at these levels and will want to see the price breaking above the 2371 resistance to invalidate the bearish setup and position for a rally into a new all-time high.

Upcoming
Catalysts

There are no catalysts
today so the market will likely trade based on yesterday’s US PMIs data.

See the video below

This article was written by Giuseppe Dellamotta at www.forexlive.com.