Gold consolidates near all-time highs as traders switch their focus to the data | investingLive

Fundamental
Overview

Gold extended the gains
into a new all-time high right before the FOMC decision but eventually gave
back everything as the Fed didn’t match the very dovish expectations priced in by
the market.

In fact, the dot plot
showed that the FOMC projected two more rate cuts for 2025 by a narrow
majority, with the rest of officials expecting just one more or even none.
Moreover, the Fed projected just one cut in 2026 compared to three that the
market was pricing before the decision.

Fed Chair Powell then
labelled the rate cut as a “risk management” action given the weakening in the
labour market data. But overall, he sounded pretty neutral even though he
understandably placed more emphasis on the labour market given the two consecutive
soft NFP reports.

Looking forward, it’s going
to be all about the data. Strong data will likely trigger a hawkish repricing
in interest rates expectations and weigh on gold. On the other hand, weak data
will likely continue to support it.

In the bigger picture, gold
should remain in an uptrend as real yields will likely continue to fall amid
the Fed’s dovish reaction function. In the short-term though, hawkish repricing
in interest rates expectations will likely keep on triggering corrections.

Gold
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that gold made one last push into a new all-time high before the FOMC
decision and then erased the gains as the Fed didn’t match the very dovish
expectations from the market.

From a risk management perspective, the buyers
will have a better risk to reward setup around the major trendline, while the sellers will look for a
break lower to extend the drop into the 3,120 level next. Such a big correction
might happen if we get strong US data in the next weeks that triggers a hawkish
repricing in interest rates expectations.

Gold Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum. We
have also a minor support
around the 3,615 level. The buyers will likely step in around the trendline and
the support to position for a rally into a new all-time high, while the sellers
will look for downside breakouts to pile in for a drop into the major
trendline.

Gold Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see that we have an important swing level at 3,672 that acted as resistance
recently. If the price breaks to the upside, we can expect the buyers to pile
in for a rally into a new all-time high. The sellers, on the other hand, will
likely lean on that level with a defined risk above it to position for a drop
into the 3,615 support with a better risk to reward setup. The red lines define
the average daily range for today.