Dollar and Treasury yields rose after a top US central banker warned the Fed was not softening its fight against inflation. Thus, the gold price declined on Monday from the three-month high it had seen in the previous session. According to technical analyst Ross J Burland, gold is probably about to enter a distribution phase. The analyst notes that the rally has slowed down on the lower timeframes.
“Gold, so it fell”
Spot gold hit its highest level since August 18 on Friday. It fell 0.5% to $1,761.07 at press time on Monday. U.S. gold futures were down 0.3% at $1,764.30. The gold price posted its biggest weekly gain since March 2020 last week after signs of cooling U.S. inflation lifted hopes that the Fed would be less hawkish in rate hikes.
cryptocoin.com As you follow on , Fed Chairman Christopher Waller said on Sunday that the Fed may consider slowing the pace of rate hikes at its next meeting, but this should not be seen as a “softening” in its battle against inflation. Stephen Innes, managing partner of SPI Asset Management, comments:
Gold fell in response to Fed’s Waller pushing back market response to weakness in CPI. Because no single data point indicates that inflation has been tamed. Volatility is here to stay as it remains at the mainstay of inflation, making no mistake.
Gold price technical analysis
Here’s how technical analyst Ross J Burland explains how gold’s technical view looks on the charts. Gold bulls press against key resistances ahead of US CPI. It is clear that there is a possibility of a bull correction here to fully test the bear commitments. After the US CPI data, the gold price indeed rose as follows.
Preliminary analysis, gold weekly charts-1Gold price was accumulating three weekly lows in a previous structure.
Preliminary analysis, gold weekly charts-2This W formation looked menacing for the week ahead with prospects of moving towards the trendline. The Cancer harmonic pattern on the daily chart was also bullish.
The price had already slipped from a micro trendline. It was piling up in the rear, which introduced the risks of a higher move.
While it’s still early days, the price has broken the weekly trendline after the triple bottom. Also, the impulse closed tightly above the $1,730 structure. Given these, it’s possible that this is the gains of a long ascension phase.
Gold update, weekly chart-1The precious metal price action has left a W formation as follows:
Gold update, weekly chart-2This is a reversal pattern that is expected to allow price to retrace towards the neckline when the time comes. However, the price formed a series of lower timeframe structures that could act as support.
The chart below shows the resistance area where price is headed, with the micro trendline breaking on Friday as a sign of a trend slowdown.
Gold 4-hour chart-1It is possible that we may see a distribution phase in the coming days. The hourly chart on this one is worth considering:
Gold 4-hour chart-2US Dollar Index (DXY) analysis
DXY broke below key support level on Friday. Thus, it broke below the downtrend line. However, the bears seem to be finding support in the lower quarter of the 106 region, which will serve as the basis for a significant correction. A break of 108.00 opens the risk of a prolonged reversal towards 109.50 on the Fibonacci scale.
US Dollar meets support
