How much higher can gold move?
When the US walked in on Tuesday morning, Gold (XAU/USD) was getting pummeled. The precious metal was already down over $20, near 1900, and it looked like a route was in store for the US session. However, an hour before the US Employment Cost Index was released, Gold began to go bid. By the time the weaker than expected ECI was released at 8:30am ET, Gold was back to 1912.11. The weaker ECI (1.1% vs 1.2% expected), sent the US Dollar lower on hopes that a lower increase in wages may cause the Fed to be more dovish at its FOMC meeting tomorrow. With the US Dollar moving lower, it was off to the races for Gold, completely reversing the overnight move and sending it to new highs for the day.
Source: Tradingview, Stone X
On a daily timeframe, XAU/USD had moved lower from 2070.46 on March 8th, 2022 to 1614.95 on September 28th, 2022 in an orderly downward sloping channel. On September 30th, Gold moved sideways out of the channel and then began to move aggressively higher. XAU/USD traded above the 50 Day Moving Average and formed a new upward sloping channel into the end of 2022, settling the year at 1823.92. On January 6th, Gold broke above the top trendline of the channel and then broke above the 61.8% Fibonacci retracement from the March 2022 highs to the September 2022 lows at 1896.46. Gold made a high of 1949.23 on January 26th, then profit taking ensued into the tomorrow’s FOMC meeting.
Source: Tradingview Stone X
Trade Gold now: Login or Open a new account!
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
On a 240-minute timeframe, Gold pulled back from the recent high and tested the top trendline of the channel but failed. If Gold continues to move higher, the first resistance is at the highs of January 26th at 1949.23. However, there is minimal resistance between there and the March 8th, 2022, highs at 2070.46. The only area stopping it is the highs from April 18th, 2022 at 1998.35. First support is at a confluence between the January 17th lows, today’s low, and the upward sloping trendline of the channel between 1896.68 and 1904.82. Below there, Gold can fall to the bottom of the channel near 1856, then horizontal support at 1824.48.
Source: Tradingview Stone X
By the reaction after today’s ECI, it looks like gold bugs still mean business. Everyone is expecting a 25bps hike from the FOMC and a hawkish Fed. If there is any hint of dovishness in the statement or Powell’s press conference which follows, Gold could be back near 2070 within a few days! However, if the Fed remains hawkish, the US Dollar may go bid and thus, Gold may pull back.
Learn more about forex trading opportunities.
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
City Index is a trading name of StoneX Financial Pty Ltd.
The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.
While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.
StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.
It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.
StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.
© City Index 2024