On the daily chart below, we can
see that gold sold off from the 2076 record high as stronger than expected US
economic data made the market to reprice interest rates expectations on the
hawkish side. Gold is inversely correlated with real yields and this hawkish
repricing in the rates path saw real yields rising, ultimately weighing on gold.
The price has now pulled back to
our expected strong support zone where we find the upward trendline, the 1934 swing low level and
the 50% Fibonacci
retracement level. This will be a make-or-break moment for
the buyers as a breakout would open the door for a bigger selloff into the 1800
swing point.
On the 4 hour chart below, we can
see that we now have also the downward trendline defining this latest
downtrend. A break above the trendline would give the buyers more conviction
for a return to the 2076 high. We can also notice that the recent swing low
is diverging with the MACD.
This is generally a sign of a weakening
momentum and it’s often followed by pullbacks or reversals. So, if we see gold
breaking above the trendline, the target will be the 1984 resistance and if
that resistance fails, then we have high probabilities of seeing gold again
at the 2076 level if not higher.
On the 1 hour chart below, we can
see that the bearish momentum looks exhausted as we start to see more
rangebound price action near this strong support zone. The buyers are likely to
pile in here targeting a break above the 1954 resistance and a rally towards
the 1984 level. The sellers, on the other hand, may lean on that 1954
resistance to target the breakout of the 1934 support zone, but a more
conservative and higher probability trade would be to just wait for gold to
fall below the support zone to then target the 1800 level.