Basic Overview
After breaking the 2480 resistance level, gold eventually managed to extend its gains to the 2532 level as buyers flocked in.
In the big picture, gold is expected to remain supported as real yields decline as we head into the Fed’s easing cycle, but in the near term, strong US data could provide some pullbacks along the way.
Tomorrow we get the preliminary US PMIs and if the data surprises to the upside it could lead to some weakness in gold and it will be interesting to see if the market decides to shake it off or if it will lead to a larger correction to the downside.
Technical Analysis of Gold – Daily Time Frame
Gold daily
On the daily chart, we can see that gold recently managed to break above the major resistance area around the 2480 level and extended the gains to the 2532 level as more buyers entered.
Now the buyers are in control and the breakout should give them more confidence to target new highs. On the other hand, the sellers will want to see the price drop back below the 2480 level to invalidate the breakout and head down to the 2360 level.
Gold Technical Analysis – 4 Hour Time Frame
Gold 4 hours
On the 4-hour chart, we can see that we now have a strong support area around the 2480 level where we can find the confluence of the trend line and the 50% Fibonacci retracement level.
If a pullback towards the support level occurs, we can expect buyers to step in with risk defined below the trend line to set plans for new highs with a better risk-reward setup. On the other hand, sellers will want to see the price break below the trend line to invalidate the breakout and set plans for a drop to the 2360 level.
Technical Analysis of Gold – 1 Hour Time Frame
gold 1 hour
On the 1-hour chart, we can see that the price recently bounced on the secondary uptrend line to reach new highs but is now trading below it. This could be a sign that the bullish momentum has slightly diminished and a pullback to the 2480 support level is more likely. The red lines mark the average daily range for today.
Upcoming incentives
Tomorrow we get the US jobless claims numbers and the US PMIs. On Friday we wrap up with Fed Chairman Powell’s speech at the Jackson Hole Symposium.