Last Friday, the price of gold went up after the US NFP report was released. The report showed that the labor market was slowing down, with the unemployment rate going up and wage growth going down. This caused real yields to drop and gold to go up. This has been happening for a few years now, where when real yields go up, gold doesn’t drop as much, but when real yields go down, gold goes up a lot. Right now, it seems like gold doesn’t have much room to go down, but it has a lot of room to go up because inflation is slowing down and risks to the economy are going up as long as the Fed keeps their policies tight. In the short term, good US data might make gold go down a bit, but in the long term, bad data will make gold go up by a lot.
Looking at the daily chart, we can see that gold has been going up steadily since hitting the 2277 support level. The buyers came in at the bottom of the range and now they are aiming for the 2430 level. If the price reaches that level, we can expect sellers to come in and push the price back down towards the 2277 support level.
On the 4-hour chart, we can see that the price went up to the 2387 resistance level after the soft US NFP report, and then started to go back down. There is a strong support zone around the 2368 level, where we can find the previous swing high, a minor trendline, and the 61.8% Fibonacci retracement level. Buyers are likely to come in at this level with a defined risk below the trendline in hopes of breaking above the 2387 resistance level. Sellers, on the other hand, will be looking for the price to break below the trendline to increase their bearish positions towards the 2277 support level.
Looking at the 1-hour chart, we can see a clear picture of the recent price action and the bullish setup around the 2368 support level. The lower limit of the average daily range for the day is also around this support level, giving buyers more confidence to enter the market around the 2370 level and continue the uptrend.
This week, there are some important economic releases to look out for. Fed Chair Powell will be testifying to Congress, and the markets will be paying close attention to any hints about the future monetary policy direction after the NFP report. Thursday will be a key day with the US CPI and Jobless Claims figures being released. Finally, on Friday, we will see the US PPI and the University of Michigan Consumer Sentiment survey.