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Gold Fails at Resistance
It seems that gold bulls just can’t catch a break. Despite Fed rate hike expectations fading over the last month, a fresh rally in USD has acted as a major barrier to upside in the safe-haven metal. Indeed, even with recent periods of risk aversion, demand has turned away from gold and favoured USD. Concerns over the health of the Chinese economy have been a major issue recently. With Fed rate hike expectations dying down, the market has increasingly focused on China and subsequent downside risks for the global economy.
Shifting Fed View
While the Fed is now roughly priced to cut rates by end of H1 2024, USD remains well supported near-term on safe-haven demand. While this remains the case, gold prices look likely to continue to struggle to find higher ground. Should USD breakout properly here this should see gold prices falling firmly lower.
US Data & Fed Speakers on Watch
Looking ahead this week, US ISM Services data and weekly unemployment claims will be the key data releases to watch. We also have a slew of Fed speakers on deck. However, the bigger focus will remain on the broader risk backdrop and how safe-haven flows develop. If USD continues higher this week, gold looks vulnerable to an acceleration lower near-term.
Technical Views
Gold
The rally in gold has stalled for now into a test of the bear channel highs and the retest of the underside of the broken bull trend line. With this area holding as resistance, focus now is on the next support zone at 1905.46, ahead of deeper support at the 1871.04 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.