Gold Technical Analysis – The Fed didn’t provide anything new

Fundamental Overview

The FOMC decision on Wednesday didn’t provide anything new. In fact, the Fed delivered on expectations with no surprises whatsoever. The central bank kept rates steady, reduced the QT pace, revised growth lower and inflation higher, and kept the dot plot mostly unchanged.

Fed Chair Powell acknowledged the current uncertainty around Trump’s policies and the inflation outlook but confirmed that the economy remains healthy, and the Fed is in a good position to wait for more clarity.

In the bigger picture, as long as the Fed doesn’t change its reaction function and doesn’t mention rate hikes, the trend should remain to the upside as real yields will continue to fall unless we get another strong growth scare. Therefore, all the technical pullbacks continue to be just dip-buying opportunities.

The next key event is scheduled for Monday when we get the US Flash PMIs which coupled with the UMich inflation expectations triggered the growth scare last month.

Gold Technical Analysis – Daily Timeframe

On the daily chart, we can see that gold got into some consolidation around the 3050 level as we haven’t got anything new in terms of fundamentals. From a risk management perspective, the buyers will have a better risk to reward setup around the 2955 level where they will also find the trendline for confluence. The sellers, on the other hand, will want to see the price breaking below the trendline to target the 2832 level next.

Gold Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have a minor support around the 3020 level which is also the neckline of the head and shoulders formation. This is where we can expect the buyers to step in with a defined risk below the neckline to position for a rally into new highs. The sellers, on the other hand, will look for a break lower to gain more conviction and pile in for a drop into the 2955 level next.

Gold Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a counter-trendline that is defining the current pullback and can turn into a bullish pennant if the price were to break to the upside. In such a case, the buyers will likely increase the bullish bets into new highs, while the sellers will likely lean on the counter-trendline to position for the break below the neckline and the 2955 level next. The red lines define the average daily range for today.

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