Gold Technical Analysis – The Fed might be forced to pause earlier than expected

Fundamental
Overview

Gold eventually dropped by almost
a hundred dollars following Trump’s victory and the red sweep as the market scaled
back some more the expected rate cuts in 2025.

In fact, right now the
market sees basically just two rate cuts in 2025 compared to the Fed’s projections
of four.

In the bigger picture, gold
remains in a bullish trend as real yields will likely continue to fall amid the
Fed’s easing cycle. The pullbacks will likely be triggered by a repricing in
rate cuts expectations but unless the Fed’s reaction function changes, the
uptrend should remain intact.

Gold
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that gold broke below the major trendline, retested it and then continued
lower. The sellers are now in control and the natural target should be the next
trendline around the 2600 level. The buyers, on the other hand, will want to
see the price rising back above the broken trendline to start targeting a new
all-time high.

Gold Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see that we now have a downward trendline defining the current bearish momentum.
If we were to get another pullback, the sellers will likely lean on the
trendline and the 2700 resistance
to position for a drop into the 2600 support. The buyers, on the other hand,
will want to see the price breaking higher to position for a rally into a new
all-time high.

Gold Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor resistance zone around the 2680 level. This is where
we can expect the sellers to step in with a defined risk above the level to
position for the drop into the 2600 level.

The buyers, on the other
hand, will want to see the price breaking higher to target the break above the
downward trendline. The red lines define the average daily range for today.

Upcoming Catalysts

This week is a bit empty on the data front with the most important releases scheduled
for the latter part of the week. On Wednesday, we have the US CPI report. On
Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude
the week with the US Retail Sales data.

See the video below

This article was written by Giuseppe Dellamotta at www.forexlive.com.