Gold might rebound significantly today, with a potential reversal zone around 3250–3285.
- Technically, gold has been in a bear market for the second consecutive week, pushing the RSI into the oversold zone up to 1H timeframe. This suggests a potential rebound soon, allowing the bears to take a breather before resuming the downtrend.
- Additionally, the price has now approached the ascending trendline that has been drawn since the beginning of the year (spanning six months) making it a significant level (The longer the trendline holds, the more significant its technical relevance), and the current test could trigger a price reaction.
- Structurally, gold has been range-bound within the 3200–3400 consolidation zone for several months. This has created many supports and resistances in that range, making it difficult for prices to break below that zone in a single move.
- The 3250–3280 zone is seen as a potential turning point, supported by:
1. The ascending trendline intersecting near 3255
2. The 61.8% Fibonacci retracement of the prior leg aligning near 3250
3. The support zone hold around 3270-3280 - Based on an Elliott Wave theory, the market may currently be in a Complex Corrective Wave or Combination Corrective Wave, consisting of the series of a-b-c subwaves. The current move appears to be approaching the end of minor wave a, with wave b rebound anticipated to follow.
- From a macroeconomic view, today’s release of the PCE inflation data — the Fed’s preferred inflation gauge — and FOMC members speak, could cause significant volatility to gold prices. This is a suitable opportunity for a price reversal during high volatility. The price may be pressured lower before rebounding.
- The current pressure seem to stem from the market expectations that PCE data will increase due to recent surges in oil prices and the potential inflationary effects of tariffs, leading to current gold selling pressure as market less expect the Fed rate cut. However, if PCE data surprises to the downside, it could trigger the opposite reaction, a gold rebound, as the market would start to price in a higher likelihood of earlier Fed rate cuts. Even if PCE released high, as expected, there might be positions unwind to take profit once the fact is realized, pushing gold prices up. Therefore, the odds currently favor a buy-on-dip in gold.
- However, even if a price reversal occurs today, a stable upward trend cannot be expected yet. The price remains in a corrective wave, and the Fed is unlikely to rush interest rate cuts soon. They will likely wait for clarity on Trump's reciprocal tariff policy and their economic impact. Moreover, inflation has not yet reached the Fed's target of 2.0%. Therefore, the market could still be disappointed by the Fed's cautious stance during this period, which would continue to pressure gold prices.
- The expected rebound range is about $70–$100, with an initial target of around 3370–3400, before potentially reversing downward again. Gold prices next week are likely to remain in a rebound theme.
Analysis by: Krisada Yoonaisil, Financial Markets Strategist at Exness
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.