The recent US economic data surprised expectations to
the upside and pressured gold as the prospects of more rate hikes weigh on the
precious metal. In fact, since the FOMC meeting where Fed Chair Powell said
that they expect two more rate hikes this year if the economy performs as
expected, we had very strong housing market data, solid
US Jobless Claims, US Services PMI in
expansion and an incredibly strong Consumer Confidence report. If
the data remains strong, we can expect the Fed to keep hiking and lead to a
sustained depreciation in gold.
Gold Technical Analysis –
Daily Timeframe
On the daily chart, we can see that gold has been
on a steady downtrend as the US data keeps on surprising to the upside and the
Fed remains hawkish. The break of the key 1934 support should
have led to a more aggressive selloff, but we are seeing some resistance from
gold. In fact, the bearish momentum looks weak, and this is probably because
the market is waiting for the next NFP and CPI reports as they will be pivotal
for the Fed’s decision. The moving averages are
crossed to the downside, so the bearish trend is clear and, all else being
equal, we can expect a fall into the support level at 1805.
Gold Technical Analysis – 4
hour Timeframe
On the 4 hour chart, we can see that the price has
been moving very slowly to the downside as the bearish momentum looks weak. In
fact, the price is diverging with the
MACD, and the
sellers would be better off leaning on the downward trendline where
they will also encounter the daily 21 moving average. If the price breaks above
the trendline, we should see more buyers coming in and extend the rally into
the 1984 resistance.
Gold Technical Analysis – 1
hour Timeframe
On the 1 hour chart, we can see that the sellers
at the moment are leaning on the 21 moving average to enter the market as they
target a break below the recent low at 1902. Today’s US Jobless Claims
report will be important for the next move as strong data should lead to more
downside, while weak figures should provide the pullback into the trendline.
This article was written by FL Contributors at www.forexlive.com.