Gold Technical Analysis – All eyes on the US CPI

Fundamental Overview

Gold pulled back yesterday which is something we also saw in other markets with the US dollar strengthening. This could be hedging activity into CPI as there was no fundamental driver.

The US CPI and Fedspeak after that, will shape markets expectations heading into the Jackson Hole Symposium where Fed Chair Powell could open the door for a rate cut in September.

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 has been climbing steadily into the key 3,438 resistance but experienced a pullback yesterday. Overall, we still have a rangebound market and from a risk management perspective, the sellers would be better off shorting around the resistance, while the buyers would have a better risk to reward setup around the 3,245 support.

Gold Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we don’t really have clear levels where to lean onto other than the zone around the 3,340 level where yesterday’s bearish momentum waned. This is where we can expect the buyers to step in with a defined risk below the zone to position for a rally into the 3,438 resistance. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the 3,245 support.

Gold Technical Analysis – 1 hour Timeframe

On the 1 hour chart, there’s not much else we can add here although it’s worth noting that we have the US CPI report today so the technicals might not mean much and it would be better to trade after the release. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have the US CPI report. On Thursday, we get the US PPI and the US Jobless Claims figures. On Friday, we conclude the week with the US Retail Sales and the University of Michigan Consumer Sentiment report. Focus also on Fedspeak, especially after the US CPI data.