Fundamental Overview
Gold dropped briefly below a key support yesterday following the
FOMC decision as the market perceived it as more hawkish than expected.
Overall, apart from some slight tweaks, the Fed was in line with the market’s expectations, and the market’s reaction might have been an overreaction. There’s lots of algo-driven noise during such big events.
The data is what really matters now as it will decide what the Fed is going to do. It will likely take just one soft CPI in January to see the market reacting in a dovish was with real yields falling and gold rallying.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold fell briefly below the 2600
support yesterday following the FOMC decision but eventually managed to erase some of those losses and rise above the key level. The buyers will likely pile in around these levels to target the 2721 resistance, while the sellers will look for another break below the 2600 support to increase the bearish bets into the next major
trendline around the 2400 level.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we are still trading inside the range between the 2600 support and the 2721 resistance with the 2660 zone as the mid-level. There’s not much else we can add here as the buyers will target the 2660 zone first, while the sellers will look for a break below the 2600 support to gain more conviction for further downside.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor downward trendline now defining the current bearish momentum. The sellers will likely lean on it to position for the break below the support, while the buyers will look for a break higher to increase the bullish bets into the 2660 zone. The red lines define the
average daily range for today.
Upcoming Catalysts
Today, we get the latest US Jobless Claims figures, while tomorrow we conclude the week with the US PCE data.
See the video below
This article was written by Giuseppe Dellamotta at
www.forexlive.com.
