Gold Technical Analysis

Last week, the Fed finally paused its tightening cycle, settling at a
range of 5.00-5.25%. Their rationale behind this decision was to await
additional economic data before determining any further interest rate
increases. Their aim is to carefully calibrate the appropriate level of
monetary restraint necessary to lower inflation to the desired 2% target without
inflicting excessive strain on the economy. They have also added 50 bps to
their projected terminal rate in the Dot Plot to show their commitment in
fighting inflation. The economic data is now what really matters as even the
Fed doesn’t know how much tightening is still needed or where the economy will
be in the next six months.

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the trendline has been
breached, but the price has kept on ranging as the market remains uncertain on
the Fed’s rates path. The support at 1934
was briefly breached last week, but thanks to another miss in the US Jobless
Claims, gold has bounced back into the range. The red 21 moving average has been
acting as dynamic resistance for the sellers to enter the market but it’s now
getting weak as the moving averages threat a crossover due to the rangebound
price action.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see more closely the month-long
range where gold has been stuck into. We have the support level at 1934 and the
resistance level at 1984. A clear break on either side supported by a
fundamental catalyst should lead to a big move afterwards as momentum traders
enter the market. For now, we will likely range till the second part of the
trading week as there’s not much on the data front to move the market until
Wednesday at least.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see that we
also have a strong mid-level that’s been acting as both support and resistance.
It acts like a sentiment barometer where we can see more upside when the price
stays above the level, and more downside when it falls below it. Therefore, aggressive
buyers are likely to pile in here with a tight risk below the level and target
the 1984 resistance. The sellers, on the other hand, will look to pile in once
the price breaks below the level to target the 1934 support.

This week
is relatively empty on the data front with just the US Jobless Claims and the
US PMIs scheduled for Thursday and Friday respectively. Nonetheless, we will
hear from many Fed members with the Fed Chair Powell also testifying to
Congress on Wednesday and Thursday.

This article was written by FL Contributors at Source