In the past two weeks, Gold has been completely
ignoring the rise in real yields and the US Dollar as the events in the Middle
East remained the sole focus. In fact, every surge in prices was caused by a
key development in the Israel-Hamas war. The latest rally into the weekend was
caused by a report from ABC news where it
was said that the Israeli military got the “green light” to move into Gaza
whenever it was ready. Today, Gold opened with a downside gap as we haven’t
seen any ground offence over the weekend, but the risks are still very high.
Gold Technical Analysis –
Daily Timeframe
Gold Daily
On the daily chart, we can see that Gold spiked
above the key resistance around
the 1985 level but eventually got rejected and finished the week below the
resistance. This candlestick formation is called “shooting star” and it’s
generally a reversal pattern. We can also see that the price got overstretched
as depicted by the distance from the blue 8 moving average. In such
instances, we can usually see a pullback into the moving average or some
consolidation before the next move. We can also notice that the moving average
sits right at a support zone, which makes it a very good target for a pullback.
Gold Technical Analysis – 4
hour Timeframe
Gold 4 hour
On the 4 hour chart, we can see that right around
the support zone at 1950 we can find the confluence with the
trendline, the red
21 moving average and the 38.2% Fibonacci retracement level.
This is where the buyers should step in with a defined risk below the trendline
and target new highs. The sellers, on the other hand, will want to see the
price breaking lower to position for a bigger fall into the support around the
1890 level.
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 right
into the key resistance level. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. In this case, it adds another layer
of confluence for a pullback into the trendline and in case of a break lower, a
reversal into the 1890 support.
Upcoming Events
Tomorrow, we will get the US PMIs and Gold might
continue to be supported in case the data misses expectations. On Thursday, we
will see the US Jobless Claims data with Continuing Claims recently showing
some softness in the labour market. Finally, on Friday, we will get the US PCE
report, which is not expected to change anything for the Fed at this time.