On the daily chart below, we can see gold selling off from a record high of 2076 as stronger than expected US economic data led the market to reassess interest rate expectations on the hawkish side. Gold is inversely correlated with real yields, and this aggressive re-pricing in the price path has pushed up real yields, ultimately affecting gold.
The price has now retreated to the expected strong support area where we find the uptrend line, the 1934 swing low, and the 50% Fibonacci retracement level. This will be a make or break moment for the buyers as the breakout will open the door for bigger selling at the 1800 swing point.
On the 4 hours chart below, we can see that we now also have a downtrend line marking this recent downtrend. A break above the trend line will give the buyers more convincing to return to the 2076 high. We can also notice that the recent swing low diverges with the MACD indicator.
This is generally a sign of weak momentum and is often followed by pullbacks or reversals. Therefore, if we see gold breaking above the trend line, the target will be the 1984 resistance, and if this resistance fails, then We have high odds of seeing gold again at 2076 if not higher.
On the hourly chart below, we can see that the bearish momentum seems to be exhausted as we start to see more range-bound price action near this strong support area. Buyers are likely to accumulate here targeting a break above the 1954 resistance and a rally towards the 1984 level. On the other hand, sellers may rely on the 1954 resistance to target a breakout of the 1934 support area, but a more conservative trade and the most likely one is to wait for gold to drop below the support area to target 1800 levels.
