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Last
Friday, Gold extended the rally into new highs as the US NFP report,
despite beating on the headline number, showed again some weakness under the
hood. In fact, the unemployment rate jumped to the highest level in two years
and the household survey showed job losses for the third consecutive month.
Moreover, the average hourly earnings, which are particularly important for inflation,
were much lower than expected. Overall, Gold should remain supported as we head
into the easing cycle and strong US data should offer dip-buying opportunities
as long as the market doesn’t start to fear a new inflationary wave that forces
the Fed to hike rates.
Gold Technical Analysis – Daily
Timeframe
Gold Daily
On the daily chart, we can see that Gold continues
to make new highs with no pullbacks along the way. We can notice though that
the price is a bit overstretched as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.
Gold Technical Analysis – 4
hour Timeframe
Gold 4 hour
On the 4 hour chart, we can see that from a risk
management perspective, the buyers will have much better risk to reward setup
around the previous all-time high at 2142 where we can also find the confluence of the
38.2% Fibonacci retracement level and
the daily 8 moving average. This is where we can expect the buyers to step in
with a defined risk below the Fibonacci level to position for a rally into new
highs. The sellers, on the other hand, will want to see the price breaking
below the Fibonacci level to pile in and target a drop into the 2080 support.
Gold Technical Analysis – 1
hour Timeframe
Gold 1 hour
On the 1 hour chart, we can see that the
price has been diverging with
the MACD for some
time. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, it should signal at least a pullback into
either the minor black trendline or the
2142 level. The buyers might want to split their orders in half as the price
can bounce from either level. Remember that we also have the US CPI report
tomorrow which will move the market a lot. If we get a spike lower, the buyers
will likely take it as an opportunity to fade the move and finally join the
uptrend at better levels.
Upcoming Events
Tomorrow we have the main event of the week, that is
the US CPI report. On Thursday we get the US PPI, the US Retail Sales and the
US Jobless Claims figures. On Friday, we conclude the week with the University
of Michigan Consumer Sentiment survey. Strong data is likely to weigh on Gold
in the short term, while weak figures should give it a boost.
