Gold Technical Analysis – Pullback or the start of a trend?

The rise
in US real yields coupled with a strong US Dollar have been weighing on Gold
and we saw the yellow metal breaking the June low threatening a selloff towards
the 1805 level. This week we got some bad news first from the PBoC which cut
rates by less than expected and then from the PMIs
yesterday that point to a weaker global growth going forward. Treasury yields
fell as the market is starting to err more on the dovish side and Gold got a

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Gold eventually
broke below the June low but rallied back above the level soon after. We saw a
strong rally as more negative news started to filter through and the price
reached the red 21 moving average. This is
where we can expect some sellers coming into the market with a defined risk
above the moving average and target another break below the June low.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see that we’ve been diverging with the
MACD for
quite a while coming into the 1893 support. This is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, as the price broke above the trendline we got a
reversal, and the buyers are now eyeing the 1934 resistance. That’s also where
we should find the sellers leaning on the level with the 50% Fibonacci retracement level
for confluence.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see that we
have a minor divergence with
the MACD right
when the price is approaching the 38.2% Fibonacci retracement level. If we get
a pullback, the buyers should lean on the trendline and the swing low support
around the 1914 level with a defined risk below the trendline and target a
break above the 1934 resistance. The sellers, on the other hand, will want to
see the price breaking below the trendline to pile in and target a break below
the 1893 support.

Upcoming Events

Today we have the US
Jobless Claims, and the market will want to see if the labour market remains
strong or starts to show signs of weakness. Strong readings should keep the
hawkish expectations steady and weigh on Gold, while weak data should support
the yellow metal as we are likely to see a weaker US Dollar and lower Treasury
yields. Tomorrow we will hear from Fed Chair Powell who is expected to just
repeat their data dependency and keep all the options on the table.

This article was written by FL Contributors at Source