GOLD: Bullish Setup Anticipated Amid USD Weak and Low Treasury Yields
On Tuesday, gold dropped to the $2,315 area, nearing the multi-week low touched the previous day, influenced by a modest strengthening of the US Dollar (USD). Despite the USD's attempted recovery from its over two-month low, there was no significant follow-through, due to increasing expectations that the Federal Reserve (Fed) will cut interest rates later this year, bolstered by softer US macroeconomic data. These expectations have kept US Treasury bond yields depressed, which in turn has benefited the non-yielding yellow metal during the European session on Wednesday.
Technical Analysis Overview
For today's session, we are looking for a long setup for gold, particularly in light of the upcoming ISM Services PMI release in the US. From a technical perspective, several confluence factors support a bullish outlook:
1. Rebound from the 50% Fibonacci Level: The price has rebounded from the 50% Fibonacci retracement level, a significant support area indicating potential for upward movement.
2. Divergence on the H4 Chart: A divergence on the H4 chart suggests that selling pressure is weakening, further supporting the case for a bullish setup.
These technical indicators align to suggest that gold is positioned for a potential upward move.
Key Factors Influencing Gold
1. USD Strength and Fed Rate Cut Expectations: While the USD showed modest strength, it lacked sustained momentum due to growing expectations that the Fed will start cutting interest rates later this year. Softer US macro data has reinforced this outlook.
2. US Treasury Yields: Depressed US Treasury yields, influenced by expectations of Fed rate cuts, are benefiting gold. Lower yields decrease the opportunity cost of holding non-yielding assets like gold, making it more attractive.
Market Strategy
Given the current technical setup and fundamental backdrop, our strategy involves looking for a long position in gold. The rebound from the 50% Fibonacci level and the observed divergence on the H4 chart support this approach. Additionally, the anticipation of the ISM Services PMI release adds a potential catalyst for movement.
Conclusion
Gold has experienced some downward pressure but remains supported by underlying factors such as low US Treasury yields and expectations of future Fed rate cuts. The technical indicators, including the rebound from the 50% Fibonacci level and the divergence on the H4 chart, suggest a bullish setup is likely. As a result, the current market environment presents an opportunity to look for long positions in gold, particularly in anticipation of supportive economic data releases.
On Tuesday, gold dropped to the $2,315 area, nearing the multi-week low touched the previous day, influenced by a modest strengthening of the US Dollar (USD). Despite the USD's attempted recovery from its over two-month low, there was no significant follow-through, due to increasing expectations that the Federal Reserve (Fed) will cut interest rates later this year, bolstered by softer US macroeconomic data. These expectations have kept US Treasury bond yields depressed, which in turn has benefited the non-yielding yellow metal during the European session on Wednesday.
Technical Analysis Overview
For today's session, we are looking for a long setup for gold, particularly in light of the upcoming ISM Services PMI release in the US. From a technical perspective, several confluence factors support a bullish outlook:
1. Rebound from the 50% Fibonacci Level: The price has rebounded from the 50% Fibonacci retracement level, a significant support area indicating potential for upward movement.
2. Divergence on the H4 Chart: A divergence on the H4 chart suggests that selling pressure is weakening, further supporting the case for a bullish setup.
These technical indicators align to suggest that gold is positioned for a potential upward move.
Key Factors Influencing Gold
1. USD Strength and Fed Rate Cut Expectations: While the USD showed modest strength, it lacked sustained momentum due to growing expectations that the Fed will start cutting interest rates later this year. Softer US macro data has reinforced this outlook.
2. US Treasury Yields: Depressed US Treasury yields, influenced by expectations of Fed rate cuts, are benefiting gold. Lower yields decrease the opportunity cost of holding non-yielding assets like gold, making it more attractive.
Market Strategy
Given the current technical setup and fundamental backdrop, our strategy involves looking for a long position in gold. The rebound from the 50% Fibonacci level and the observed divergence on the H4 chart support this approach. Additionally, the anticipation of the ISM Services PMI release adds a potential catalyst for movement.
Conclusion
Gold has experienced some downward pressure but remains supported by underlying factors such as low US Treasury yields and expectations of future Fed rate cuts. The technical indicators, including the rebound from the 50% Fibonacci level and the divergence on the H4 chart, suggest a bullish setup is likely. As a result, the current market environment presents an opportunity to look for long positions in gold, particularly in anticipation of supportive economic data releases.
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✅ TELEGRAM CHANNEL: t.me/+VECQWxY0YXKRXLod
🔥 UP to 4000$ BONUS: forexn1.com/broker/
🔥 ZERO SPREAD BROKER: forexn1.com/usa/
🟪 Instagram: instagram.com/forexn1_com/
🔥 UP to 4000$ BONUS: forexn1.com/broker/
🔥 ZERO SPREAD BROKER: forexn1.com/usa/
🟪 Instagram: instagram.com/forexn1_com/
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.