Gold Technical Analysis

Yesterday, the Fed left interest rates unchanged as
expected with basically no change to the statement. The market was fearing some
hawkish stuff, but we didn’t get any. In fact, the Dot Plot showed still three
rate cuts for this year and the economic projections were all upgraded with
growth and inflation higher and the unemployment rate lower. Moreover, during
the press conference, Fed Chair Powell didn’t
sound hawkish, on the contrary, he was fairly neutral. The reaction was pretty
straightforward as real yields fell and Gold rallied.

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Gold bounced on
the previous all-time high around the 2142 level and surged to a new high
following the Fed decision. From a risk management perspective, the buyers will
have a much better risk to reward setup around the trendline at 2080
level, but we will likely need some frightening US inflation data to see the
price falling all the way back to that level. For now, the path of least
resistance remains to the upside.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see that the price
yesterday broke above the counter-trendline and rallied strongly as the buyers
piled in aggressively following the Fed decision and the breakout. The price is
now a bit overstretched as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see that we have
some support at the
most recent all-time high level where we can find the confluence of the
38.2% Fibonacci
retracement level and the 4-hour 8 moving average.
This is where we can expect the buyers to step in with a defined risk below the
level to position for a rally into new highs. The sellers, on the other hand,
will want to see the price breaking lower to position for a drop back into the
2142 level.

Upcoming Events

Today we will get some key economic data as we will
see the latest US Jobless Claims figures and the US PMIs. Strong data is likely
to weigh on Gold in the short-term, while weak figures should give it a boost.

See the video below

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