The Fed hiked interest rates by 25 bps as expected
leaving the policy statement unchanged. The market was eager to get some clues
on the next policy moves but was disappointed as Fed Chair Powell just
reaffirmed their data dependency and kept all the options on the table.
Yesterday, the US Jobless Claims beat
expectations by a big margin again and sent hawkish vibes across the markets.
Gold is inversely correlated with US real yields and therefore it weakened
following the data.
Gold Technical Analysis –
Daily Timeframe
Gold Daily
On the daily chart, we can see that Gold rejected
the resistance 1984 and
fell into the red 21 moving average, where
we are seeing a bounce as the buyers are probably stepping in. The sellers will
need the price to fall below the 1934 support to get full control and target
the 1805 swing low.
Gold Technical Analysis – 4
hour Timeframe
Gold 4 hour
On the 4 hour chart, we can see that if we were to
get a pullback, we have a good resistance zone around the 1963 level where
there is confluence with the
50% Fibonacci retracement level
and the red 21 moving average. The sellers are likely to step in here with a
defined risk above the level and target the breakout of the 1934 support and
eventually the 1805 level. The buyers, on the other hand, will need the price
to break above the resistance zone to pile in for a breakout above the 1984
resistance.
Gold Technical Analysis – 1
hour Timeframe
Gold 1 hour
On the 1 hour chart, we can see that some
aggressive sellers are already leaning on the short term 21 moving average and
a previous swing level. If this level breaks, the buyers will pile in to target
the breakout above the resistance zone, while the sellers will be waiting there
to position for a move lower.
Upcoming Events
Today the market will
be focused on the US PCE and ECI reports. Given that the market is already
looking forward to the next month’s CPI report, we are unlikely to see big
moves from the PCE unless there’s some big surprise. In fact, the market is
likely to focus more on the ECI as the Fed remains attentive to wage inflation
given the strength in the labour market. Higher than expected data should weigh
even more on Gold, while lower than expected reading should provide a pullback.