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GOLD OUTLOOK & ANALYSIS
- Fed speakers and consumer sentiment in focus.
- Technical analysis suggests more downside to come – potential death cross, bear flag breakout.
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XAU/USD FUNDAMENTAL BACKDROP
Gold prices have come under pressure with the USD finding support post-NFP. This Friday, the greenback has faltered slightly giving spot gold some relief ahead of the Michigan consumer sentiment release later today (see economic calendar below). Expectations are for a more optimistic outlook for February than January and any upside beat could see the dollar higher and gold under pressure once more. That being said, I do not foresee a large swing by way of the consumer sentiment print due to the substantial emphasis placed on next week Tuesday’s U.S. CPI report.
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From Fed perspective, Fed officials have become increasingly more hawkish of recent and more aggressive talk later today could once more bolster the dollar.
ECONOMIC CALENDAR
Source: DailyFX Economic Calendar
TECHNICAL ANALYSIS
Introduction to Technical Analysis
Moving Averages
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GOLD PRICE 4-HOUR CHART
Chart prepared by Warren Venketas, IG
The 4-hour XAU/USD price action is rather interesting from a technical analysis standpoint with the recent bear flag (green) breakout leading to bears almost piercing the 1850.00 psychological support handle. Traditionally, more downside would be expected from a bear flag breakout but with minimal fundamental data at hand, gold market participants are adopting a more cautious approach. As mentioned before, U.S. CPI is likely to either follow through with the downward move or reverse sentiment. Looking at the 50 (yellow) and 200-day (blue) moving averages, there seems to be a convergence that may result in a death cross that could form from sticky inflation next week.
Resistance levels:
- 1880.00
- Trendline resistance (black)
Support levels:
IG CLIENT SENTIMENT: HESITANT
IGCS shows retail traders are currently distinctly LONG on gold, with 63% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment however, due to recent changes in long and short positioning we arrive at a short-term mixed bias.
Contact and followWarrenon Twitter:@WVenketas
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