Last week, The Fed finally shut up its tightening cycle settles in the 5.00-5.25% range. The reason for this decision was to wait for further economic data before setting any further rate hikes. Their goal is to carefully calibrate the appropriate level of monetary tightening necessary to reduce inflation to the desired 2% target without placing undue strain on the economy. They have also added 50 bps to their predicted terminal rate in the Dot Plot to show their determination to fight inflation. The economic data is what really matters now because even the Fed doesn’t know how much tightening is still needed or where the economy will be in the next six months.

Gold Technical Analysis – Daily Time Frame

Gold daily

On the daily chart we can see that trend line was breached, but the price was still moving as the market remains uncertain about the Fed’s rate developments. Support at 1934 was briefly broken last week, but another error in US Jobless Claims sent gold back into range. Red 21 moving average acts as dynamic resistance for sellers entering the market, but is now weakening as the moving averages threaten to cross due to price action within the range.

Gold Technical Analysis – 4 Hour Time Frame

Golden 4 hours

On the 4-hour chart, we can see more closely the monthly range that gold is stuck in. We have a support level at 1934 and a resistance level at 1984. A clear breakout on either side supported by a fundamental catalyst should then lead to a big move as momentum traders enter the market. For now, we are likely to move into the second part of the trading week as there is not much on the data front to move the market until at least Wednesday.

Gold Technical Analysis – 1 Hour Time Frame

Golden 1 hour

On the 1 hour chart we can see that we also have a strong intermediate level that acts as both support and resistance. It acts as a sentimental barometer where we can see more upside when the price stays above the level and more downside when it falls below it. Therefore, aggressive buyers are likely to pile in with a tight risk below the level and target the 1984 resistance. Sellers, on the other hand, will look to accumulate once the price breaks below the level to target the 1934 support.

This week
is relatively empty on the data front, with only US Jobless Claims and US PMIs scheduled for Thursday and Friday. However, we will hear from many members of the Fed with Fed Chairman Powell testifying before Congress on Wednesday and Thursday.

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