Gold Technical Analysis – Watch the US data

The US
data has started to miss expectations in the past few weeks which gave Gold a
tailwind as it’s sensitive to interest rates expectations. In fact, we saw the
market repricing expectations on the more dovish side with no more rate hikes
expected and rate cuts starting to be priced as soon as June 2024. Yesterday,
the big beat in the US ISM Services PMI changed
those views on the more hawkish side with a 50/50 chance now for a November
rate hike and rate cuts priced out in 2024. The data now is very important as
the market finds itself at a crossroads between more rate hikes or a recession.

Gold Technical Analysis – Daily
Timeframe

On the daily chart, we can see that Gold is now
testing the red 21 moving average. We
might see a bounce here with the buyers leaning on the moving average to
position for another rally into the 1984 resistance if the
data weakens more. The sellers, on the other hand, are targeting again the 1893
support.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see that Gold has been
trading within a rising channel as the US data kept on missing expectations but
reversed soon after breaking above the 1934 resistance. In fact, the price
couldn’t rally from the strong resistance turned support where we
had also the confluence with the
50% Fibonacci retracement level
and the red 21 moving average and broke through it turning the uptrend into a
downtrend.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see that we
had a divergence with
the MACD right
after the breakout of the 1934 resistance. This is generally a sign of
weakening momentum often followed by pullbacks or reversals. In this case,
given the break below the support, we got a confirmation of a reversal and the
sellers piled in more aggressively to target the 1893 support. We had another
divergence after the selloff yesterday which gave us a pullback into the trendline and
the 38.2% Fibonacci retracement level.

This is where the sellers are piling in to
position for more downside and we should see the bearish momentum picking up if
the price breaks below the black counter-trendline. The buyers will need the
price to break above the trendline to invalidate the bearish setup and start
targeting new higher highs, especially if the US data comes out on the weaker
side.

Upcoming Events

Today we will have the last important US economic
data for this week, which is the US Jobless Claims report. We saw just
yesterday that Gold doesn’t like strong US data as that raises the chances that
the Fed might need to do more raising Treasury yields and the US Dollar. So, if
we get good data, we should see more weakness in Gold, while bad data should
support it.

See also the video below