The quick
rise in the US real yields and the US Dollar in August weighed a lot on Gold
and the yellow metal sold off with very shallow pullbacks along the way.
Recently, the less hawkish comments from Fed members and the
miss in the US PMIs gave
Gold some support as the Treasury yields and the USD retreated. Going forward
it’s going to be all about the data as strong readings should keep weighing on
Gold while a deterioration in the data should support it.
Gold Technical Analysis –
Daily Timeframe
Gold Daily
On the daily chart, we can see that Gold has
avoided a complete breakdown as it rallied back above the 1893 low soon after
breaking below it. The price is now testing the red 21 moving average and it’s
struggling to break through as the sellers are probably leaning on the moving average to
position for more downside.
Gold Technical Analysis – 4
hour Timeframe
Gold 4 hour
On the 4 hour chart, we can see that after the long
divergence with the
MACD coming
into the 1893 low, the price broke above the downward trendline
confirming a reversal and rallied towards the 38.2% Fibonacci retracement level.
This is where the sellers are piling in with a defined risk above the 1934 resistance to
position for another selloff below the 1893 support. If the price extends all
the way up to the 1934 resistance, we should see the sellers piling in even
more aggressively as they will have an even better risk to reward setup.
Gold Technical Analysis – 1
hour Timeframe
Gold 1 hour
On the 1 hour chart, we can see that we
recently got a quick selloff from the 38.2% Fibonacci retracement level during
the Fed Chair Powell’s speech and then a quick turnaround as the buyers leant
on the support around 1904 to position for a rally into the 1934 resistance.
The price action now might be messy, but the key levels to watch will be the Fibonacci
retracement levels and the 1904 support.
Upcoming Events
This week is an important one given that we will see
many key labour market data, including the US NFP, before the next FOMC
meeting. We start tomorrow with the US Consumer Confidence and the US Job
Openings. On Wednesday, we have the US ADP report. Moving on to Thursday, we
will have the US Jobless Claims and the US PCE data. Finally, we conclude the
week with the US NFP and the ISM Manufacturing PMI on Friday. Although the Fed
keeps all the options on the table, it’s also leaning more towards a pause in
September, so we will need strong data to make the market to expect a hike at
the upcoming meeting. In case we see weak readings, Gold is likely to rally and
vice versa if we get strong figures.