Gold Technical Analysis – The focus is on the US CPI

Fundamental Overview

The upside in gold continues to be capped by the selloff in the US stock market as it tightens financial conditions when it’s this aggressive.

The problem is that we got weaker economic data amid increasing inflation expectations. The market might be fearing that in case we get a slowdown, the Fed might not be fast enough in cutting rates due to the inflation constraint which would worsen the economic pain.

The US CPI report tomorrow is the main event of the week and will likely trigger big moves in the market. Hot data will likely lead to a strong selloff in gold, while soft figures might give the green light for another rally.

Gold Technical Analysis – Daily Timeframe

On the daily chart, we can see that gold couldn’t extend the rally into a new all-time high recently as the US stock market selloff continues to cap the upside. There’s not much we can glean from this timeframe so we need to zoom in to see some more details.

Gold Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price is stuck in a range between the 2892 support and the 2930 resistance although we had a fakeout below the support yesterday. The buyers are likely to step in around these levels to position for a rally into the resistance, while the sellers will look for another break lower to pile in for a drop into the 2790 level next.

Gold Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we had a minor downward trendline defining the bearish momentum on this timeframe. The price broke above it this morning and it’s also trading above the support zone. This should give the buyers enough conviction to push into the resistance, while the sellers will look for a break below the support to invalidate the bullish setup. The red lines define the average daily range for today

Upcoming Catalysts

Today we get the US Job Openings data. Tomorrow, we have the US CPI report. On Thursday, we get the US PPI data and the US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment report.

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