After a selloff earlier on, gold is now pulling back to a former support zone that might hold as resistance.
Or will it break?
Check out these near-term inflection points I’m watching on the hourly time frame.
Gold (XAU/USD): 1-hour
Gold (XAU/USD) 1-hour Chart by TradingView
In our FX Weekly Recap, we discussed how a handful of FOMC officials (including Fed head Powell himself!) have been pushing back on the idea of cutting interest rates three times this year.
After all, inflation-related indicators have been reflecting sticky price pressures, and the latest quarterly GDP price index was no exception.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!Gold gave up significant ground to the Greenback on expectations that U.S. borrowing costs might stay higher for longer, but the precious metal managed to claw back some gains when the U.S. flash PMI readings fell short of estimates early this week.
However, resistance at the 38.2% Fib, S1 ($2,338) and former support region around $2,350 appears to be holding since dollar bulls might make a comeback. The upcoming U.S. core PCE price index might determine whether or not a larger retracement is possible.
A bigger pullback could reach the 61.8% Fib closer to the broken short-term trend line at $2,375, which might be the line in the sand for a bearish correction. If any of the Fibs hold, watch out for a continuation of the selloff to the next bearish targets at the swing low near S2 ($2,284).
Don’t forget that the 100 SMA already crossed below the 200 SMA to signal a shift in trend, and that these technical indicators might hold as dynamic resistance levels as well.
Do you think gold is in for more losses soon?