On the daily chart below, we can
see that after the big and fast rally caused by the Silicon Valley Bank
collapse and the fall in real yields, gold has entered a consolidation near the
previous top.
We can also notice that the price
is diverging with the MACD, which is generally a signal of
a loss of momentum and we can generally see a pullback afterwards. The market
started to consolidate as the data after the banking crisis has not confirmed
weakness in the economy yet, on the contrary, the economic reports have been stronger
than expected. It’s likely that we will see a major pullback in
case the data keeps beating expectations.
On the 4 hour chart below, we can
see that the recent pullback bounced from the 38.2% Fibonacci
retracement level. We can also see a symmetrical
triangle pattern. The price can breakout on either side, so it’s
paramount to watch the economic data as an eventual breakout should lead to a
big move. Tomorrow, we have the US Jobless Claims report and it’s likely that we
will see weakness in gold in case the data beats and strength in case the data
misses.
On the 1 hour chart below, we can
see more closely the symmetrical triangle consolidation. Generally, it’s better
to sit out and wait for the breakout caused by a fundamental catalyst before
entering new positions. One can easily get chopped out in such environments.