Gold is
still stuck in a range as the economic data remains mixed. We got very strong
economic releases in August that led to a selloff in Gold as real yields and
the US Dollar rose, ultimately weighing on the yellow metal. In the past couple
of weeks though, the data started to weaken, especially on the labour market
side and that led to a quick rebound in Gold. Last week, we got again two
strong reports with the ISM Services PMI and Jobless Claims beating
expectations by a big margin. As long as the data remains mixed, we are likely
to see the rangebound price action continue with bullish impulses on weak
readings and bearish impulses on strong figures.
Gold Technical Analysis –
Daily Timeframe
Gold Daily
On the daily chart, we can see that Gold is
basically stuck in a range between the 1984 resistance and the
1893 support. We recently got a selloff from the 1950 level, but the price
found support and bounced on the red 21 moving average. If the
US data keeps on deteriorating, we can expect another rally into the 1984
resistance, conversely, if the data comes out strong, Gold is likely to fall
back into the 1893 support.
Gold Technical Analysis – 4
hour Timeframe
Gold 4 hour
On the 4 hour chart, we can see that the bearish momentum
has waned and the price started to consolidate between the 1915 and the 1929
levels. In such instances, it’s better to wait for a breakout and then go with
the flow. As long as the price stays below the 1934 level though, the bias will
remain bearish.
Gold Technical Analysis – 1
hour Timeframe
Gold 1 hour
On the 1 hour chart, we can see that we
recently got a divergence with
the MACD which
was a signal that the bearish momentum was indeed waning and we could see a
pullback or reversal soon. More aggressive sellers are likely to pile in around
the upper bound of the range with a defined risk above the level to position
for a fall into the 1893 support. The buyers, on the other hand, will want to
see the price breaking higher to pile in and position for a rally into a new
higher high.
Upcoming Events
This week is likely to be a volatile one given the
release of top tier economic indicators including the US CPI. In fact, on
Wednesday we get the US CPI report, which is expected to show an acceleration
in the headline inflation but a deceleration in the core measure. On Thursday,
we get the US PPI, Retail Sales and Jobless Claims data. Finally, we conclude
the week with the University of Michigan Consumer Sentiment report on Friday.
Strong readings are likely to weigh on Gold while weak figures should give the
yellow metal a boost.
See also the video below