Gold Technical Analysis – The focus turns to the US CPI data

Fundamental Overview

The bullish momentum has waned this week as traders turned their attention to the US CPI data coming up next week. The soft NFP report triggered a quick dovish repricing in interest rates expectations which fuelled a rally in gold as real yields fell.

We’ve also seen more and more Fed members changing their tone on rate cuts following the NFP data, so the CPI could either seal a September cut or bring more uncertainty.

In fact, in case the data comes out lower than expected, the market will likely reinforce the dovish bets and might even price in higher changes of a third cut by year-end.

On the other hand, higher than expected figures will likely trigger a hawkish repricing weighing on gold and keeping us in the range.

In the bigger picture, gold should remain in an uptrend as real yields will likely continue to fall amid Fed easing. But hawkish repricing in interest rates expectations will likely keep on triggering corrections in the short term.

Gold Technical Analysis – Daily Timeframe

On the daily chart, we can see that gold continues to slowly edge higher towards the key resistance around the 3,438 level after the NFP-induced bounce near the 3,245 support. If we get there, we can expect the sellers to step in around the resistance once again with a defined risk above the level to position for a drop back into the support. The buyers, on the other hand, will look for a break higher to increase the bullish bets into a new all-time high.

Gold Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the bullish momentum has waned, and we’ve just been climbing by inertia. There’s not much else we can glean from this timeframe as there are no clear levels where traders can lean onto, so we need to zoom in to see some more details.

Gold Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a minor upward trendline defining the bullish momentum on this timeframe. The buyers will likely continue to lean on the trendline with a defined risk below it to keep pushing into the resistance. The sellers, on the other hand, will look for a break lower to target a pullback into the 3,350 level next. The red lines define the average daily range for today.