Crucial Days for Gold

Gold prices have stabilized at around $2,020 ahead of Tuesday's trading session, following last Friday's dip. Recent fluctuations in risk sentiment have been the driving force behind the pricing of the precious metal. How does this look on the charts? Let’s find out.

Treasury yields have increased across the board since the Federal Open Market Committee raised its target rate by 25 basis points to 5-5.25% last week. Similarly, real yields appear to have moved with an inverse correlation to the recent gold price. The gold price has been influenced by Wednesday's US CPI data for clues on the Fed's rate path going forward, and the market is anticipating headline inflation of 5.0% year-on-year to the end of April.

US Dollar - H4 Timeframe

The US Dollar based on the price action from the charts is currently consolidating inside a wedge pattern. As we look forward to the CPI figures and the aftermath of the publication, I am confident we should get to see a break out of the wedge pattern - a positive sign for trading opportunities. It is on this note that I will personally be following the price action in hopes of a clear breakout soon. In the meantime, my sentiment is that price will continue to tow its recent bearish path and possibly create a new low on the H4 timeframe.

Analyst’s Expectations: 

Direction: Bearish

Target: 101.248

Invalidation: 101.841

XAUUSD - Daily Timeframe

The daily timeframe on Gold (XAUUSD) is clearly bullish; as we can deduce from the recent break above the high I marked with a horizontal arrow. The rectangle overlapping the trendline support represents a drop-base-rally demand zone to which price has already reacted. Now let’s check the lower timeframe for confirmation.

XAUUSD - H1 Timeframe

Now that we’ve confirmed the price action on XAUUSD to be bullish from the daily timeframe, what remains now is to establish the appropriate point of entry on the lower timeframe based on support and resistance levels. Looking at the 1-hour chart, I can see price consolidating to form a rising channel so my entry will be based on either of the two plotted support trendlines. The first one has extra confirmation based on the 50-period moving average, while the other one fits well within the vicinity of the 200-period moving average.

Analyst’s Expectations: 

Direction: Bullish

Target: $2043.57

Invalidation: $2014.50

CONCLUSION

The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.

TRY TRADING NOW

You can access more of such trade ideas and prompt market updates on the telegram channel.

Author: Adetola-Freeman Ogunkunle

More by this author

Similar

22.05.2023 10:27 Is the Euro Set to Recover Yet?

Here's the scoop: The Bank of England (BOE) is set to accelerate the pace at which it shrinks its balance sheet, according to one of its deputy governors. Currently, the BOE is unwinding about £20 billion of quantitative easing every three months. The goal is to reduce the stock by around £80 billion per year through active sales and maturing assets.

22.05.2023 10:06 CAD: What’s Next?

It seems like the Canadian consumer has a firm grip on their wallet, which is no surprise given the current economic climate. Inflation in April crept up from 4.3% to 4.4%, adding to the financial woes.

10.05.2023 10:01 How Will CPI Change the Market?

On Wednesday, the US dollar weakened in anticipation of the US CPI data, which could influence market exposure. A Bloomberg survey predicts a year-on-year read of 5.0% to the end of April. Market sentiment is affected by the US debt ceiling and issues with regional banks. While the major APAC equity indices are...

Latest news

24.05.2023 14:14 Gold’s Next Move Could Be Huge!

Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.

24.05.2023 12:16 What to Trade in June

Hey guys, this is the last full trading week in May, and many forward-looking individuals like myself are already preparing themselves to seize whatever opportunities June may have in store. On this note, I will review a few commodities that have satisfied my quest for swing-trading opportunities in the coming month. Follow me!

23.05.2023 09:15 Will GBP Recover Now?

The Bank of England (BoE) has dramatically shifted its economic forecasts. They no longer expect a recession in the UK and have upgraded their growth projections. This year, the BoE predicts GDP growth of +0.25%, a significant improvement from previous expectations. Next year's forecast is even more optimistic, with a projected growth of 0.75%.