On analysis of the movements of the in different time charts since the beginning of this week, I find that the gold futures have finally tested a peak on Tuesday as overnight comments from U.S. Federal Reserve Chair Jerome Powell sparked heightened caution over growth, inflation, ad interest rates.
On Tuesday evening, Fed Chair Jerome Powell not only extended uncertainty over the U.S. economy but also raised scepticism among the gold bulls too as the gold futures have found extensive bearish pressure after testing a record high at $3826 as Powell’s comments came just a week after the Fed cut interest rates by 25 basis points as widely expected, and flagged plans to further ease policy, resulted in a sharp rise, followed by an advent of selling spree, exactly as I predicted in my last analysis.
I find that this bearish pressure is clearly visible on Wednesday as the gold futures have tested the day’s high at $3812.60, after opening at $3796.60, sliding constantly while trading currently at $3766, and look ready to test the immediate support at the 9 DMA at $3730, if the pace of decline remains intact as more key U.S. economic prints are due in the coming days, with a final reading on second-quarter gross domestic product growth due on Thursday. The print is expected to confirm that the U.S. economy grew faster than expected in the June quarter, while the other important PCE price index data is due on Friday, which will be watched more closely.
Technical Levels to Watch
In a daily chart, gold futures are trying to defend the imminent support at $3365, as a breakdown below this pivotal point could push the futures to test the important support at the 9 DMA at $3730, and a breakdown below this could push the futures towards the next support at the 20 DMA at $3665.
Inversely, if the gold futures experience a reversal from current levels, big bears could load fresh shorts above the immediate resistance at $3812, with a stop-loss at $3838 and a target at $3512.
In a 1-Hr. Chart, gold futures are attempting to defend the significant support at $3765 amid extensive bearish pressure, as the formation of bearish crossovers since the 9 DMA has already pierced the 50 DMA, and the 20 DMA is poised to pierce the 50 DMA, confirming the continuation of this slide as of today’s closing.
Undoubtedly, the next three hours could be decisive for the bears as the big bears have extended the pressure to push the gold futures below the immediate supports at 100 DMA at $3750, and the 200 DMA at $3727.
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Disclaimer: Readers are advised to take any position in gold futures at their own risk, as this analysis is only based on observations.