Fundamental
Overview
Gold has been rallying
steadily this week since bouncing from the bottom of the recent range. The soft
US
Job Openings on Wednesday gave it the tailwind to push into the key
resistance around the 2530 level.
This move has been driven
by falling real yields as the softer US data caused the market to position more
dovishly into the NFP release. This puts the recent rally in gold at risk in
case the NFP report comes out better than expected as real yields will reverse
the recent drop.
In the bigger picture, gold
should remain supported as real yields fall due to the Fed’s rate cut cycle,
but in the short-term, strong US data might weigh on the market a bit.
Gold
Technical Analysis – Daily Timeframe
Gold Daily
On the daily chart, we can
see that gold eventually bounced on the support zone around the 2480 level. We are now trading
near the top of the range where we can expect the sellers to step in with a
defined risk above the resistance to position for a break below the support.
The buyers, on the other hand, will want to see the price breaking above the
resistance to increase the bullish bets into new highs.
Gold Technical Analysis
– 4 hour Timeframe
Gold 4 hour
On the 4 hour chart, we can
see more clearly the range between the 2480 support and the 2530 resistance. The
market participants kept on “playing the range” by buying at support and
selling at resistance and today’s NFP release will likely trigger a breakout on
either side.
Gold Technical Analysis
– 1 hour Timeframe
Gold 1 hour
On the 1 hour chart, we can
see that once the price broke above the downward trendline more buyers piled in to position
for a rally into the resistance. Today’s NFP report is the most important of
the year, so the market impact will likely be huge.
The red lines define the average daily range for today, but I extended the range
manually as the indicator is based on the previous 5 days where we just stayed
in the range. Therefore, don’t rely too much on the average daily range today.
Upcoming
Catalysts
Today we conclude the week with the US NFP report where the consensus sees
160K jobs added and a 4.2% unemployment rate.