Fundamental Overview
Despite the lower bounce caused by the latest FOMC decision, gold did not extend its decline and remained confined in the range between support at 2600 and resistance at 2721.
The FOMC’s decision was seen as more hawkish than expected, but apart from some small changes, the Fed just met market prices.
The data is what really matters now because it will decide what the Fed does next. We have the NFP report this week and the market could err on the defensive, so it wouldn’t be surprising to see another retest of support.
However, the main event will be the US CPI release next week. The soft data should trigger a market reaction with real yields falling and gold rising. Conversely, another hot report is likely to send gold lower with sellers targeting the 2500 level.
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. Buyers will likely continue to step around support to position for a rally into resistance, while sellers will look for a breakout lower to target a dip into the main trendline. around the 2400 level.
Gold Technical Analysis – 4 Hour Time Frame
Gold 4 hours
On the 4-hour chart, we can see that the price has recently moved up into the mid-range around the 2660 level, but has declined again as sellers piled into a position to break below the support. Buyers will need to break the 2660 zone to open the door for the next resistance to emerge at 2721.
Technical analysis of gold – 1 hour time frame
Gold 1 hour
On the hourly chart, we can see that we have a small descending trendline that now defines the current bearish momentum. Sellers will likely continue to rely on it to position themselves for a break below support, while buyers will look for a break higher to look for an extension above the 2660 zone. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we will get US ISM services PMI data and US jobs data. On Wednesday we have US ADP and FOMC minutes. On Thursday, we will get the latest data on US jobless claims. On Friday, we conclude the week with the US NFP report.