Gold Technical Analysis – Bullish signs keep emerging

The
strong US data in the past months and the quick rise in Treasury yields and the
US Dollar weighed a lot on Gold, which threatened at some point a complete
breakdown. Recently, we started to see a turnaround in the data beginning with
the miss in the US PMIs last
week and the big misses in the labour market reports this first half of the
week. The market priced out the expectations for further rate hikes from the
Fed and brought forward expectations for rate cuts. This caused a selloff in
the Treasury yields and the US Dollar ultimately leading to a rally in
Gold.

Gold Technical Analysis –
Daily Timeframe

On the
daily chart, we can see that Gold bounced on the 1893 level and rallied
strongly soon after as more and more US data started to miss expectations. The
price has even broken out of the red 21 moving average and the resistance at the
1934 level which flipped the bias from bearish to bullish. The next stop should
be the key resistance at the 1984 level.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see that we had a divergence with the
MACD as the
price was falling into the 1893 level. This is generally a sign of weakening
momentum often followed by pullbacks or reversals. In this case, as the price
broke out of the trendline, the
reversal was confirmed and coupled with the bad US data the buyers piled in
aggressively to ride the bullish wave. The price is now trading within a
channel and from a risk management perspective, the buyers would be better off
to wait for a pullback into the lower bound of the channel before taking new
positions.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see that we
have another divergence right when the price is trading around the upper bound
of the channel. This might be just a confirmation that a pullback is due, and
the most likely support should be the lower bound of the channel where we find
the confluence with
the previous resistance turned
support, the 38.2% Fibonacci
retracement level and the 4-hour 21 moving average.
This is where the buyers should pile in with a defined risk below the level and
target new higher highs. The sellers, on the other hand, will want to see the
price breaking lower to position for another drop into the lows.

Upcoming Events

This week is all about the US labour market data and the
recent releases haven’t been encouraging on a forward-looking basis. Today, the
main event will be the US Jobless Claims report accompanied by the US PCE data.
Tomorrow, we conclude the week with the US NFP and ISM Manufacturing PMI
reports. Weak data should support Gold, while strong readings should lead to
weakness, so it will be crucial to watch the releases in the next few days and
weeks.