Gold Technical Analysis – The price whipsaws on US CPI and FOMC

Fundamental
Overview

Yesterday, gold got a boost from the soft US CPI report as real yields and
the US Dollar dropped following the data release. Unfortunately, the gains were
erased later in the day as we got a bit more hawkish than expected FOMC
decision.

Zooming out though, the Fed decision didn’t change much as Fed Chair Powell
backpedalled on the hawkish projections saying that they remain very data
dependent and that they don’t have a high confidence in their forecasts.

Gold
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that gold bounced near the key support zone around the 2277 level where we had also
the 38.2% Fibonacci retracement level for confluence. This is the level the sellers will
need to break to turn the bias more bearish and open the door for a drop into
the major trendline
around the 2150 level. For now, the buyers remain in control.

Gold Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see that the price probed above the resistance zone around the 2320 level
yesterday following the US CPI release but eventually fell back below it due to
the more hawkish than expected FOMC decision.

The buyers will want to see
the price rallying back above this zone to gain back the conviction and increase
the bullish bets into the all-time high. The sellers, on the other hand, will
likely lean on this resistance with a defined risk above it to position for a
drop into the 2277 support.

Gold Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see that the price broke the minor trendline that was defining the short-term
uptrend. This has switched the bias a bit more bearish, so we will need the
price to rally back above the resistance zone and the trendline to invalidate it.
The red lines define the average
daily range for today.

Upcoming
Catalysts

Today we have the US PPI and the latest US Jobless Claims figures. Tomorrow,
we conclude the week with the University of Michigan Consumer Sentiment survey.

See the video below

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