Gold Technical Analysis

<p>The Fed last week paused
its tightening cycle, maintaining interest rates at 5.00-5.25%. This decision
was motivated by their intention to gather additional economic data before deciding
on further rate hikes. Their objective is to find the optimal level of policy
restraint that can bring inflation down to their target without risking a
severe recession.</p><p>So far, the economic data
in the United States has been positive, particularly in the housing sector,
which has demonstrated significant resilience since the Federal Reserve began
reducing its rate hikes in December 2022. This positive performance in the
housing market may have contributed to the recent strength in the USD.
Moreover, Fed Chair Powell kept saying that he expects two more rate hikes this
year if the economy performs as expected. </p><p>Gold Technical Analysis –
Daily Timeframe</p><p>On the daily chart, we can see that Gold has
eventually broken below a key support level at
1934 where we also had the 50% <a href="https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/">Fibonacci retracement</a> level
for confluence. The
break below the major upward <a href="https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/">trendline</a> was
already a signal of bearish sentiment but the consolidation afterwards seemed
to suggest that the price could bounce back above the trendline and result in a
fakeout. Now the price sits at the 61.8% Fibonacci retracement level, will it
bounce back above the 1934 resistance, or we will see a big selloff into the
1800 level?</p><p>Gold Technical Analysis – 4
hour Timeframe</p><p>On the 4 hour chart, we can see that with this
latest leg lower we have a <a href="https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/">divergence</a> with the
<a href="https://www.forexlive.com/Education/technical-analysis-understanding-macd-20220427/">MACD</a>. This is
generally a signal of weakening momentum often followed by pullbacks or
reversals. We may see a classic “break and retest” move where the price pulls
back into the 1934 resistance, where we also have a trendline now, and then
starts to fall again. The sellers should lean on that 1934 resistance with a
defined risk above the trendline. </p><p>Gold Technical Analysis – 1
hour Timeframe</p><p>On the 1 hour chart, we can see that we
have a minor downward trendline that can be used by the aggressive buyers to
pile in once the price breaks above it in expectation of the price continuing
to rally past the 1934 resistance. The sellers have also the 61.8% Fibonacci
retracement level near the downward trendline where they can lean on to for an
even better risk to reward setup.</p><p><a href="https://www.forexlive.com/EconomicCalendar">Today</a>
we will see the latest US PMIs where gold may react positively if the data
misses expectations as the market would price out the July hike, and negatively
in case the data beats forecasts due to more hawkish expectations. </p>

This article was written by FL Contributors at www.forexlive.com.