Gold prices, reaching the highest since May 5, are consolidating as traders await the US PCE Price Index, a key inflation indicator. The upcoming data could impact the Fed’s policy, influencing the demand for the US Dollar and providing direction for gold. The Greenback sees some repositioning, recovering modestly ahead of the data risk. A positive tone in US equity futures acts as a headwind for gold, but the growing belief that the Fed might cut rates in March 2024 could limit significant dollar appreciation. Amid China’s economic concerns, gold finds support in this nuanced market scenario.
XAUUSD – D1 Timeframe
As seen on the attached chart which shows the daily timeframe of XAUUSD (Gold), price seems to have created a head-and-shoulders pattern, with an initial rejection from the 88% of the Fibonacci retracement level. Based on this, I expect to see a pause in the bullish rally, at least, until price reaches the 50% Fibonacci level.
XAUUSD – H4 Timeframe
On the 4-Hour timeframe, a more cautious approach would be to wait for the break and retest of the trendline shown in the chart above, and then the bearish trend can be considered to be in motion.
- Direction: Bearish
- Target: 1950.77
- Invalidation: 2053.42
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