Fundamental Overview
Gold hit a new weekly high yesterday as the price broke above a key level. The US NFP and CPI reports are upon us and they will move the market in a big way so the recent breakout could turn into a fake pretty easily.
Market prices did not change much as roughly two rate cuts for the year remained the base case. The Fed is betting heavily on inflation progress to continue tapering further, so next week’s US CPI report will have a bigger impact on interest rate expectations.
Regardless, the soft NFP report should trigger a dovish market reaction and give gold a boost given that we’ve seen a fairly strong sell-off in the bond market due to the repricing of interest rate cuts. Conversely, a hot report worldwide is likely to push gold lower with support at 2600 potentially under threat.
Technical analysis of gold – daily time frame
Gold Daily
On the daily chart, we can see that gold continues to trade within a range between support at 2600 and resistance at 2721. The price is now trading above the middle of the range as buyers continue to push towards resistance. Sellers, on the other hand, are likely to rally around resistance or look for a break below support to target a dip into the main trendline around the 2500 level.
Gold Technical Analysis – 4 Hour Time Frame
Gold 4 hours
On the 4-hour chart, we can see more clearly the recent breakout above the mid-range around the 2660 level with buyers piling into a bullish position at continuation resistance. Sellers will want to see the price break below the 2660 level to position themselves for a drop back to the 2600 support.
Technical analysis of gold – 1 hour time frame
Gold 1 hour
On the hourly chart, we can’t add much more here as buyers will continue to step above the 2660 zone, while sellers will look for a dip below it to target a return to support. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US NFP report.