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Gold – Pares gains on dollar rebound

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The dollar is continuing to enjoy a post-jobs report bounce today, up around 0.2%, as Fed interest rate cuts continue to dominate investors’ mindsets.

With global economic prospects increasingly in doubt as we head into another important earnings season, the Fed is quickly becoming the only game in town as far as markets are concerned.

Gold Daily Chart

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The belief that numerous cuts are coming has been very beneficial for gold prices, although this rally has since stalled just shy of $1,450. A break below $1,380 may signal more pain to come for the yellow metal, which would hardly be disastrous given that it was trading below $1,300 in late May. The rally that followed was very significant, rising almost 13% over the next few weeks.

Given that the last two peaks fell around the same level -around $1,438 – a double top may now be forming, with the neckline around $1,382. A break of this could be the catalyst for the next push lower, with a possible price projection – the size of the double top, projected below the neckline – of around $1,326. This roughly coincides with prior support and resistance and around the 61.8 fib level.

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
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