Fundamental
Overview
Yesterday, gold spiked to the cycle highs following another soft US
CPI report. The market even started to price in the chance of a third rate
cut by the end of the year. Real yields fell and gold rallied as a result.
As of now, it looks like gold have limited downside but lots of upside as
inflation abates slowly while risks to the growth picture increase the longer
the Fed keeps policy restrictive. In the short-term, strong US data might weigh
a bit on the market, but in the long-term weak data is likely to trigger bigger
upside moves.
Gold
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that gold extended the rally into the 2430 resistance yesterday following the soft US CPI
report. That’s the area where the sellers will be piling in to position for a
drop all the way back to the 2277 support. The buyers, on the other hand, will
want to see the price breaking higher to increase the bullish bets into new
highs.
Gold Technical Analysis
– 4 hour Timeframe
On the 4 hour chart, we can
see that we now have a nice support zone around the 2390 level where we can
find the confluence
of the previous swing level, the trendline and the Fibonacci
retracement levels.
This is where we can expect
the buyers to pile in to position for the continuation of the uptrend and
target a break above the resistance. The sellers, on the other hand, will want
to see the price breaking below the trendline to increase the bearish bets into
the 2277 support next.
Gold Technical Analysis
– 1 hour Timeframe
On the 1 hour chart, we can
see that we have a minor downward counter-trendline defining the current
pullback. If the bullish momentum remains strong enough, the buyers will likely
pile in on a break to the upside to increase the bullish bets into new highs. The
red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the US PPI and the University of Michigan
Consumer Sentiment survey.
See the video below
This article was written by Giuseppe Dellamotta at www.forexlive.com.
