Gold is gradually gaining momentum as the likelihood of a December Federal Reserve rate cut increases. Recent US labour market data has been softer than expected, supporting further upward movement in gold prices ahead of the upcoming Federal Open Market Committee (FOMC) meeting.
Looking forward, gold’s direction will largely depend on the Fed’s forward guidance as well as upcoming Non-Farm Payroll (NFP) and Consumer Price Index (CPI) reports. If the Fed adopts a more dovish stance and the economic data remains weak, gold is likely to rally. Conversely, any hawkish signals could trigger a downward correction.
On a broader scale, gold should maintain its uptrend as real yields are expected to continue declining amid the Fed’s dovish reaction function. However, in the short term, any further hawkish repricing of interest rate expectations could put pressure on gold prices.
Technical analysis of gold reveals the following:
Daily timeframe
Gold is slowly approaching recent highs near 4245. This level is likely to attract sellers, who may position with defined risk above it, anticipating a pullback towards the 3887 low. Buyers will be looking for a decisive breakout above 4245 to increase bullish exposure and target new all-time highs.
4-hour timeframe
Gold has broken above a strong resistance zone around 4150, paving the way to challenge the 4245 high. Buyers are expected to continue supporting price at these levels with defined risk below support to push further upward. Sellers will be watching for a drop back below 4150, aiming for a decline towards the trendline near 4080.
1-hour timeframe
On this shorter timeframe, buyers are likely to keep building positions targeting a move towards 4245. Meanwhile, sellers will seek a break below support to drive prices down towards the 4080 area. The red lines on this chart mark today’s average daily trading range.
Overall, forex traders should monitor Fed communications closely and watch key economic reports, as these will provide the critical signals needed to position effectively in gold. The medium-term bullish trend appears intact, but short-term volatility remains possible depending on interest rate sentiment.
Original Source: Giuseppe Dellamotta of investinglive.com
