Gold Price Technical Analysis: Buyers Bet on Fed Rate Cut

Gold Price Technical Analysis: Buyers Bet on Fed Rate Cut

$XAU, $GLD, $XAUUSD

FLASH: Strong US economic growth and subdued inflation mean there is no strong argument for a rate hike or cut right now, though business confidence is fragile, a Fed policymaker said Wednesday.

“There’s not a strong case to push rates higher when inflation is under control; there’s not a strong case to move lower when growth remains healthy,” Richmond Fed President Thomas Barkin told the New York Association of Business Economists in Manhattan.

Monday, Gold futures rose as investors increased bets the economy would weaken enough to cause the Fed to cut interest rates later in the year.

The press and some analysts are calling the move safe-haven buying, I do not see it that way and I told that to my readers who called in.

What does makes sense is that worries about an escalation of the trade dispute between the US and China are raising concerns about a US economic slowdown. This notion is being reflected in the Treasury markets where a portion of the yield curve inverted again.

Flight-to-safety buying in gold is usually a short-term investment strategy. However, expectations of lower interest rates will make the USD a less-attractive investment and this should drive up demand for USD-denominated gold.

Now, June Comex gold is trading at” 1297.1, +0.2800, (+0.0200%) 23:07:58(GMT)|Real-Time Data, quoted in USD

Daily June Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. It turned up late last week when buyers took out the previous main Top at $1290.90.

Monday’s run accelerated to the Northside when buyers crossed $1294.20, turning the market higher on the year.

The next target is the 10 April main Top at $1314.70. The trend will change to down on a trade through $1267.30.

The market is now inside the 7 to 10 day frame, so start watching for a closing price reversal Top.

The major long-term retracement zone is $1299.80 to $1325.90. This area serves as the Key resistance.

The main range is $1330.80 to $1267.30. Its Fibo retracement zone at $1299.10 to $1306.50 is currently being tested. This zone is also seen to be resistance.

The short-term range is $1314.70 to $1267.30. The Fibo retracement zone at $1296.60 to $1291.00 is new support.

Daily Swing Chart Technical Forecast

Based on the current price at $1300.70, the direction of the June Comex gold futures contract Tuesday is likely to bet determined by trader reaction to the 50% level at $1299.80.

The Bullish Scenario

A sustained move over $1299.80 will indicate the presence of buyers. If this creates enough Northside momentum then look for a potential surge into the Fib0 mark at $1306.50. This is the trigger point for an acceleration into the next main Top at $1314.70.

The Bearish Scenario

A sustained move under $1299.80 signalsthe presence of sellers. This could trigger a break into the short-term Fibo mark at $1296.60, last year’s close at $1294.20 and the short-term 50% mark at $1291.00. If this price fails then look for an expansion of the selling into $1284.70 next.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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