For all the hype coming into this week, it seems that gold might need more drama than a Fed meeting and big tech earnings to get out of bed. The thing is now is that if those aren’t enough to get things moving, what will?
The Fed was a bit of a non-event, failing to offer much to markets in the grand scheme of things. Meanwhile, big tech earnings were mixed but tech shares are lower at the balance in after-hours trading. With all that, the bond market is not really budging as well with 10-year Treasury yields still stuck near 5%. As such, gold is finding little reason to go anywhere even with the Fed decision behind us and AI spending concerns resurfacing.
The hourly chart also exemplifies how uninspiring the key risk events overnight have been, with a bit of a near-term tussle starting to take shape for gold.
As we get into the latter stages of this week, gold is starting to show a distinctive bounce between its key hourly moving averages.
The 100-hour moving average (red line) near $4,026 continues to offer some near-term support, having been tested several times since yesterday. Meanwhile, the 200-hour moving average (blue line) near $4,075 is keeping a lid on any meaningful recovery. Buyers tried their luck in the aftermath of the Fed meeting but were swiftly turned away.
While we are seeing a near-term battle ensue, the daily chart continues to paint a less encouraging picture for gold buyers though.
The continued drop sine August is still very much holding, with price keeping well below both its key daily moving averages. The recent break below $4,100 last week has only reinforced the downside momentum, with the $4,000 mark being tested in the past few days.
For now, the figure level remains the key line in the sand for gold. A firm break below that risks exposing the June to July lows around the region of $3,950-60, potentially setting up another leg lower.
On the flip side, buyers will first need to reclaim 200-hour moving average at $4,075 before looking to the $4,100 level. And that is before even thinking about a push towards the next major hurdle around $4,200-20, with the 100-day moving average (red line) starting to converge there at $4,217 currently.
Now, all of this is not to say that I would rule out a technical bounce from here even though sellers are still keeping in control for the most part. But until buyers can start reclaiming the key resistance levels highlighted, it still feels like they have more to prove than the sellers actually do. So, that pretty much underscores the balance of risks for gold price at the moment.
This article was written by Justin Low at investinglive.com.
