Gold Technical Analysis: Stuck in a consolidation awaiting new catalysts

[Forex News]

FundamentalOverview

Nothing has changed this week in the market. Gold has been stuck in aconsolidation since last Tuesday despite a more hawkish than expected Fed ChairPowell. It might be a sign of a short-term bottom, but it could also be justsome exhaustion after the 11% drawdown.

There are no strong reasonsfor more upside at the moment, so the consolidation could extend for weeks oreven months if we don’t get new catalysts to trigger a sustained move on eitherside. Right now, the picture is more neutral to bearish.

Strong US data, especiallyon the labour market side, should keep weighing on gold as it would keep themarket speculating on rate cuts pause. Conversely, weak data is likely tosupport the precious metal as it would give the Fed more reasons to keep cuttingrates.

In the bigger picture, goldshould remain in an uptrend as real yields will likely continue to fall amidthe Fed’s dovish reaction function. But in the short term, a further hawkishrepricing in interest rate expectations should keep weighing on the market.

GoldTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that gold has been consolidating between the 4000 and 3900 level. There’snot much we can glean from this timeframe, so we need to zoom in to see somemore details.

Gold Technical Analysis– 4 hour Timeframe

On the 4 hour chart, we cansee that we have a strong resistance zone around the 4020 level where the pricegot rejected from several times in the past days. That’s where we can expectthe sellers to continue to step in with a defined risk above the resistance toposition for a drop into the 3820 level. The buyers, on the other hand, willwant to see the price breaking higher to pile in for a rally back into the 4150level.

Gold Technical Analysis– 1 hour Timeframe

On the 1 hour chart, there’snot much else we can add here as the sellers will look to short from theresistance, while the buyers will target a breakout. If we get a pullback fromthe resistance, the buyers will likely lean on the minor support zone aroundthe 3960 level, while the sellers will look for a break lower to increase thebearish bets into new lows. The red lines define the average daily range for today.

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Today we conclude the week with the US University of Michigan ConsumerSentiment report.

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This article was written by Giuseppe Dellamotta at investinglive.com.

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