Gold maintains the bearish bias following the hawkish Fed decision; focus shifts to data
FUNDAMENTAL OVERVIEW
Gold maintains the bearish bias following the hawkish Fed dot plot last week as the central bank’s tightening bias led to a rise in real yields and a stronger US dollar.
As a reminder, the Fed delivered a hawkish surprise by projecting a rate hike this year (the consensus was for no cuts or hikes). The market increased rate hike bets with now 41 bps of tightening priced in by year-end. There's a 36% chance of a hike already in July and 74% probability of a move in September.
The economic data and financial markets will now guide the Fed as Warsh stated that “financial markets perform best when they react to incoming data and are less efficient when they have to ask how the Federal Reserve will react to the incoming data”. He added that “financial markets are the most important source of information to guide the central bank”.
Trump also posted on Truth Social and, unlike his usual stance under Fed Chair Powell, did not object to the Fed’s decision. In fact, he said that “rate hikes could happen,” which sounds like a green light for Warsh and the Fed to do whatever they deem necessary.
The signal is that the Fed is finally looking to deliver on its price stability mandate and bring inflation back to the 2% target that it’s been missing since 2021. If the data says they need to hike, they will. This should keep weighing on gold at least until the next set of economic data.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that gold fell below the upward trendline again shifting the bias back to bearish. The natural target should be the 3,885 level. We can expect the sellers to continue to step in around the broken trendline to keep pushing into new lows, while the buyers will need the price to rise back above the trendline to open the door for new highs.
GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have a strong resistance zone around the 4,250 level where there’s also the broken trendline for confluence. If the price gets there, we can expect the sellers to step in with a defined risk above the trendline to position for a drop into the 3,885 level. The buyers, on the other hand, will look for a break to extend the pullback into the 4,350 level next.
GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have a minor upward counter-trendline defining the current pullback. The buyers will likely continue to lean on it to keep pushing into new highs, while the sellers will look for a break to increase the bearish bets into the 3,885 level next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow, we have the US Flash PMIs. On Thursday, we get the US Jobless Claims data and the US PCE report. On Friday, we conclude the week with the final University of Michigan consumer sentiment survey.
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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