Basic Overview
Gold has been on a steady decline since hitting an all-time high last Wednesday. We have seen a reversal in several other markets since last Wednesday, and it is not clear what was behind the move. Data continues to point to a resilient economy with inflation slowly falling back to target. This is expected to lead to the Federal Reserve cutting interest rates at least twice this year.
On the other hand, the risks to the growth picture increase the longer the Fed continues to impose its restrictive policies. The new driver may be that Trump now looks more and more like a likely winner, and his policies are seen as inflationary, which may eventually push the Fed to slow down on interest rate cuts.
Technical Analysis of Gold – Daily Time Frame
Gold daily
On the daily chart, we can see that gold dropped back below the 2430 level last week and the decline extended as sellers started piling in more aggressively. The natural target should be the key support at 2277. Buyers will look for buying opportunities on dips on lower time frames but a move above the 2430 resistance level should give them more confidence for further upside.
Gold Technical Analysis – 4 Hour Time Frame
Gold 4 hours
On the 4-hour chart, we can see that the price has recently broken the trend line and turned more bearish in the short term. We are now seeing some consolidation at the 2387 level.
Here we can expect buyers to step in with a risk-off position below the level in order to prepare for a rally to new highs. On the other hand, sellers will want to see the price drop to a lower level to increase bearish bets to the 2348 level after that.
Technical Analysis of Gold – 1 Hour Time Frame
gold 1 hour
On the 1-hour chart, we can clearly see the current price action. Buyers will want to see the price break above the recent higher low at 2412 to regain some control and increase bullish bets to new highs targeting a break above the 2430 resistance level.
On the other hand, sellers may want to wait for the price to return to the 2430 resistance level to get back into a better risk-reward position or increase bearish bets on a break below the 2387 level. The red lines mark the average daily range for the day.
Upcoming incentives
This week is largely data-free. Tomorrow we start with the release of the preliminary US PMIs. On Thursday we get the latest US jobless claims numbers. Finally, on Friday we wrap up the week with the US personal consumption expenditures report.