Fundamental
Overview
The Fed this week finally started its easing cycle and decided to do it with a 50 bps
cut. The market was already leaning towards a 50 bps move, so it wasn’t a
surprise.
The larger cut was framed
as kind of an “insurance” cut with the dot plot showing two more 25 bps cuts by
the end of the year and less than the market expected in 2025.
Gold weakened initially but
eventually shot higher as inflation expectations rose faster than nominal yields
driving real yields lower. The market is still pricing a 41% chance of a 50 bps
cut at the next meeting and 73 bps of easing by year-end.
Watch the US data in the
coming weeks as stronger data will likely trigger a correction, while weak
releases should keep supporting the market.
Gold
Technical Analysis – Daily Timeframe
Gold Daily
On the daily chart, we can
see that gold rallied to a new all-time high following the Fed’s decision. We
have a trendline defining the current bullish momentum. If we get a pullback,
we can expect the buyers to lean on trendline
to position for new highs, while the sellers will look for a break lower to
pile in for a drop into the 2482 level.
Gold Technical Analysis
– 4 hour Timeframe
Gold 4 hour
On the 4 hour chart, we can
see that the price broke through the previous all-time high which was acting as
resistance
and extended the rally above the 2600 level. The
resistance turned now into a support and if we get a pullback, we can
expect the buyers to lean on it with a defined risk below it to position for
the continuation of the uptrend. The sellers, on the other hand, will want to
see the price breaking lower to pile in for a drop into the trendline.
Gold Technical Analysis
– 1 hour Timeframe
Gold 1 hour
On the 1 hour chart, we can
see that we have another minor trendline defining the bullish momentum on this
timeframe. The buyers will likely keep on leaning on it to position for new
highs, while the sellers will look for a break below the trendline and the
support to target a drop into the 2540 level. The red lines define the average daily range for today.