Technical Analysis for Gold – The narrow price movement continues

Basic overview

This has been a chaotic week for many markets, including gold. After some ups and downs, we end the week essentially unchanged. There were no real changes in fundamentals this week, as the data simply showed further rebalancing in the US labor market, but did not signal any significant weakness.

Currently, gold looks to have limited downside potential but plenty of upside potential as inflation slowly eases while risks to the economic picture increase the longer the Fed maintains its hawkish policy. In the short term, strong US data could weigh on the market somewhat, but in the long term, weak data is likely to trigger larger upside moves.

Gold Technical Analysis – Daily Timeframe

On the daily chart, we can see that gold is mostly range-bound, although the market continues to have a bullish bias. From a risk management perspective, buyers have a better risk-reward ratio around the key 2277 support zone, where we can also find the 38.2% Fibonacci retracement level for confluence.

Sellers, on the other hand, want the price to fall below the support to change the bias and increase the bearish bets on the next support around the main trend line, where we can also find the 61.8% Fibonacci retracement level for confluence.

Gold Technical Analysis – 4-hour time frame

On the 4-hour chart, we can more clearly see the price action in an area around the 2325 zone. We had another quick decline recently, but the price eventually recouped the losses and returned to the 2325 area.

Buyers will want to see the price break above the recent swing high at 2337 to gain more conviction and position themselves for a next move higher to the 2387 level. Sellers, on the other hand, will likely continue to accumulate around these levels to position themselves for a drop to the 2277 support with an aim to break below it.

Gold Technical Analysis – 1-Hour Timeframe

On the 1-hour chart, we can see the chaotic price action of the past few weeks as the market waits for a catalyst to get things moving. A break below 2318 could see the market extend the decline towards the 2277 support. The red lines define the average daily range for today.

Upcoming catalysts

Today we end the week with the US PCE report, with the market expecting a further decline in core PCE towards the Fed’s 2% target.

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