Gold Technical Analysis | Forexlive

The Federal Reserve surprised the market by maintaining
interest rates at 5.00-5.25% but raising the projected terminal rate in the Dot
Plot by 50 basis points. The Fed’s reasoning to pause at this meeting was to gather
more economic data before considering another potential rate hike in July. This
cautious approach is supported by the weaker details in the latest NFP report
and the continuing disinflation in the latest CPI report, although the core
readings remain persistently high.

During the press
conference, Fed Chair Powell mentioned that the July meeting is
“live,” although he refrained from making any firm commitments.
Overall, this demonstrates the Fed’s willingness to take further measures to
address high inflation, but their actions will ultimately depend on the
economic data.

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that gold has broken
below the trendline and it’s
now threatening a breakout of the key 1934 support. This
may turn easily in a fakeout if today’s economic data misses across the board
as that would make the market to price in some dovishness and help to lift
gold.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see that the price is
probing below the support level as the more hawkish than expected FOMC event
yesterday weighed on gold. The buyers are likely to pile in here to defend the
level and target the resistance at 1984, while the sellers will keep on pushing
to confirm the breakout and extend the selloff into the 1800 level.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see more
closely the short term price action and we can notice that there are multiple
rejections as the buyers are trying hard to void the breakout. We might see
this ranging price action until the economic data release today, which is
likely to confirm or invalidate the breakout.

Today,
we have two important reports: the US Jobless Claims and Retail Sales.
Tomorrow, the focus will shift to the University of Michigan Consumer Sentiment
survey. Another big miss in Jobless Claims could potentially be concerning for
the market, indicating a rapid deterioration in the labour market and bring
rates expectations down ultimately lifting gold. Conversely, if the figures beat
expectations, it should result in more hawkish pricing and lead to the downside
breakout. Additionally, market participants will be keen to observe a decrease
in long-term inflation expectations in tomorrow’s UMich report. A higher reading
might suggest a de-anchoring of inflation expectations, which could raise
concerns and lead to a more hawkish rates pricing.