Gold got a nice jump from the Fed yesterday, going from $2,300 to $2,328. The move faded fairly quickly before slowly rising back to $2,325 in Asia today. But sellers have been careful to maintain downward pressure since Friday last week. They are approaching the 200 hour moving average (blue line):
Gold Hourly Chart (XAU/USD)
This is the case again in recent sessions, with price action now also falling back beyond the 100 hour moving average (red line). This suggests that the near-term bias is more bearish, with gold turning towards the $2,300 mark.
Yesterday’s low at $2,281 will be one to watch for near-term support below the indicated level.
So what’s next for gold?
As we look towards the latter stages of the week, everything will depend on tomorrow’s US data. We have the jobs report in focus, but also the ISM PMI services report. These will be key trigger points for buyers and sellers to act on, depending on what we get from the releases.
Against the backdrop of this week, gold is expected to post consecutive weekly declines for the first time since February. It’s down about 1.4% this week, but that’s before we get to tomorrow’s data.
I won’t say we need a retracement/correction in gold after the rally of the last two months. But generally speaking, gold still has plenty of upside, especially since traders have already reversed much of the Fed’s rate cuts so far this year. So, if the Fed finally wants to get things back on track in the coming months, this will constitute a structural tailwind for gold.
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