Basic Overview
Gold continues to trade in a tight range as the market awaits key catalysts this week. As a reminder, the Fed is now very focused on the labor market as Fed Chair Powell said they will not welcome further weakness and will do everything they can to maintain its strength.
So Friday’s nonfarm payrolls report will decide whether the central bank will go ahead with a 25bp rate cut in September or take a more aggressive approach with a 50bp rate cut. Before that, we’ll see other important releases like the ISM manufacturing PMI tomorrow, which last month sparked “growth scares.”
In the bigger picture, gold is expected to remain supported as real yields decline due to the Fed’s rate-cutting cycle, but in the near term, strong US data may weigh on the market slightly.
Technical Analysis of Gold – Daily Time Frame
Gold daily
On the daily chart, we can see that gold is stuck in a tight range as the lack of catalysts has kept the market under control. However, buyers remain in control for now and will continue to target new highs. On the other hand, sellers will want to see the price drop back below the 2480 level to turn the bias further bearish and pave the way for a drop to the 2430 level after that.
Gold Technical Analysis – 4 Hour Time Frame
Gold 4 hours
On the 4-hour chart, we can more clearly see the range between the support level of 2480 and the resistance level of 2530. Market participants are likely to continue “playing the range” by buying at the support level and selling at the resistance level until we reach a breakout on either side.
Technical Analysis of Gold – 1 Hour Time Frame
gold 1 hour
On the 1-hour chart, we can see the choppy price action over the past two weeks. There is not much to do here other than wait for a breakout. The red lines mark the average daily range for today and given the lack of catalysts and the US holiday, we should not expect any breakout today.
Upcoming incentives
Tomorrow we have the ISM manufacturing PMI. On Wednesday we have the US job openings. On Thursday we have the US jobless claims and the ISM services PMI. Finally, on Friday we wrap up the week with the US nonfarm payrolls report.