A series of US data was released last week. The durable goods orders and 4Q GDP announced early on Tue’s and Wed’s were both below market expectations. However, the price of gold remained in a narrow range. It wasn’t until Thur’s release of the core PCE price index that the gold price finally broke clear the resistance zone of 2035-40. On Fri, a new round of buying was triggered after a weaker-than-expected manufacturing PMI pushed the price to the recent high of 2088.
The latest CME FedWatch indicates that the probability of a rate cut in May is now around 27%, while the likelihood for June has risen to around 70%. The rate cut news/rumours will push the gold price higher, however, the 2088 resistance still needs to be clear. Once the price passes 2088, the 1st target can be set at around 2045. A strict stop-loss order should be in place if you choose to short-selling above 2080.
1-Hour Chart – Gold has triggered a round of buying after escaping the triangle pattern (1) last Thur. The upward momentum has accelerated on Fri’s US session, passing the early Feb high of 2065(2) and reaching the Dec high of 2088(3). The buying momentum failed to carry on at the early Asian session back from the weekend. A high-volume market condition is needed for gold to clear the 2088 resistance, pay attention to Tue’s non-manufacturing PMI, Wed.’s Powell speech. Consider the trading range of 2065-88(4) for now.
Daily Chart – Gold escapes downward channel (4) last week, and the M-T trend shifted from a downtrend to a sideways consolidation, where the range has expanded from 1985-2065(5) to 1985-2088(5.1). The price needs to break above 2088 in terms of structure to initiate a new round of buying orders.
|
S-T ressitance 3 |
2100 |
|
S-T ressitance 2 |
2095 |
|
S-T ressitance 1 |
2085-88 |
|
Market price |
2080 |
|
S-T support 1 |
2070 |
|
S-T support 2 |
2065 |
|
S-T support 3 |
2018-20 |
P. To
Risk Disclosure: Gold Bullion/Silver (“Bullion”) trading carries a high degree of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. This article is for reference only and is not a solicitation or advice to trade any currencies and investment products . Before deciding to trade Bullion you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment or even more in extreme circumstances (such as Gapping underlying markets) and therefore, you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading Bullion, and seek advice from an independent financial advisor if you require. Client should not make investment decision solely based on the point of view and information on this article.
