Gold prices experienced a 0.30% increase on Tuesday, driven by a decline in US Treasury yields and a weakening US dollar. Traders are anxiously awaiting the release of crucial US inflation data, as well as the outcome of the first presidential debate between Kamala Harris and Donald Trump. These events have the potential to significantly impact the market’s sentiment and direction.
Currently, gold (XAUUSD) is trading at $2,514, showing signs of recovery from a recent low of $2,500. The likelihood of a Federal Reserve interest rate cut is high, with a 67% probability of a 25 basis point reduction and a 33% chance for a 50 basis point cut. Although recent US job data indicated fewer new jobs than expected, the marginal decline in the unemployment rate has provided some relief to the Fed.
In the H4 timeframe, gold witnessed a bounce from trendline support, driven by a convergence of the daily timeframe pivot and hidden divergence on the stochastic indicator. However, the current price action is consolidating near another daily timeframe pivot, hinting at a potential reversal. This presents a potential entry opportunity for bearish traders, particularly upon a break-and-retest of the trendline support.
On the H1 timeframe, there are indications of a SBR (Support, Break, Retest) pattern forming, which could be confirmed post-rejection from the supply zone above. In light of these technical signals, the overall sentiment remains bearish.
Directionally, analysts hold a bearish view on gold prices, with a target set at $2,495.75 and an invalidation point at $2,530.15. The prevailing economic uncertainties and market dynamics suggest a continued downward pressure on gold in the near term.