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Gold: Looking Good for Bulls

Gold (XAUUSD) has rebounded, trading in the $2,340s on Thursday, due to a weaker US Dollar following the second estimate of US GDP data, which was revised down because of reduced consumer spending. The annualized US GDP growth for Q1 was adjusted to 1.3% from an initial estimate of 1.6%, below Q4’s 3.4% but matching analysts’ expectations, leading to a decline in US Treasury yields that positively impacts Gold. This GDP revision implies the US economy is weaker than previously thought, potentially signaling lower inflation and encouraging the Federal Reserve to reduce interest rates, benefiting Gold by lowering its holding costs. However, Gold faces pressure due to statements from Fed officials suggesting interest rates will remain elevated and higher-than-anticipated inflation figures in Europe. Specifically, inflation in Germany and Spain exceeded expectations, decreasing the likelihood that the European Central Bank will continue with further rate cuts following their anticipated June reduction.

XAUUSD – D1 Timeframe

The current situation on the Daily timeframe of XAUUSD (Gold) shows that the bullish trend could very much continue since the bearish retracement has now reached a demand zone. In confluence with the demand zone on the daily timeframe, we have the trendline support, and the 76% of the Fibonacci retracement.

XAUUSD – H4 Timeframe

The 4-hour timeframe of XAUUSD presents a QMR pattern where we can see the sweep of the previous low, the break above the previous high, and the sweep of the inducement. These are the clear definitions of a Quasimodo Reversal (QMR) pattern; very similar to an inverted head-and-shoulder in this case.

Analyst’s Expectations:

  • Direction: Bullish
  • Target: $2,449.44
  • Invalidation: $2,274.59


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