Israel’s retaliation marks a high for gold as geopolitical risks recede and markets catch up with rising US real yields. The trend may be reversing, and several important technical breaks are coming together, increasing the likelihood of a downside correction. Looking ahead, bears will need to watch for continued strength in U.S. economic data, as a rapid deterioration is likely to invalidate the bearish case.
Gold Technical Analysis – Daily Timeframe
gold daily
On the daily chart, we see that gold recently broke below key trend lines and after some consolidation, continued its decline led by the Fed’s hawkish position and yesterday’s notable US Q1 ECI report. All else being equal, the natural target should be around the next trendline around the previous high of 2145, which can be reached if US statistics continue to be strong.
Gold Technical Analysis – 1 hour timeframe
gold 1 hour
On the hourly chart, we can see that price is breaking below the bearish flag and gaining bearish momentum as sellers pile in more aggressively. Technically, the measurement target is around the 2220 level. From a risk management perspective, sellers have a better risk of setting fees around the 2320 level, as the downtrend line turns out to act as resistance, but it takes some effort to get there. There is no doubt that weak US economic data and a dovish Fed will be needed. A break above the trend line should give buyers more confidence to enter, but a break above the 2352 high will invalidate any bearish setup.
