Daily Analysis on Gold: Wednesday 31 July 2024
"Could there be a potential pullback in the price of gold?"
An important report that could significantly impact the Gold market will be released today. There are ADP Non-Farm Employment Change and Employment Cost Index q/q.
These two reports show the potential of the US labor market, which may affect the Federal Reserve's decision on interest rates, which will be updated tomorrow, Thursday 1 August 2024, as the Federal Funds Rate.
If the ADP Non-Farm Employment Change and Employment Cost Index q/q numbers exceed expectations, it could have a positive impact on the price of gold. This is because the Federal Reserve may decide to cut interest rates before reaching the 2% target inflation rate.
On the other hand, if the numbers are worse than the forecast, there will be pressure to lower the gold price. This insight also aligns with the technical analysis.
XAUUSD 4 Hour Timeframe
As you can see on the price chart, the gold price has now broken out of a downtrend, which shows the market's expectation of a lower US interest rate.
According to the technical analysis, the fundamental part could trigger a retracement of the gold price. Two scenarios could occur on the market.
1.
The price breaks the market structure before a pullback occurs to test the theoretical trendline.
2.
The market retreated before breaking the market structure as a result of the announcement of the US economic data.
Daily trade setup
XAUUSD 1 Hour Timeframe
Based on our perspective, you can see that we weigh the retreatment on the gold price in the big picture. Thus, we will focus on looking for Sell opportunities.
But if traders can handle a high level of risk management, traders could consider opening the position around 2,427, the Key resistance area. The Stop-Loss level should be set above the previous swing high of around 2,450, and the take-profit point could be around 2,380, nearly to the trendline.
An important report that could significantly impact the Gold market will be released today. There are ADP Non-Farm Employment Change and Employment Cost Index q/q.
These two reports show the potential of the US labor market, which may affect the Federal Reserve's decision on interest rates, which will be updated tomorrow, Thursday 1 August 2024, as the Federal Funds Rate.
If the ADP Non-Farm Employment Change and Employment Cost Index q/q numbers exceed expectations, it could have a positive impact on the price of gold. This is because the Federal Reserve may decide to cut interest rates before reaching the 2% target inflation rate.
On the other hand, if the numbers are worse than the forecast, there will be pressure to lower the gold price. This insight also aligns with the technical analysis.
XAUUSD 4 Hour Timeframe
As you can see on the price chart, the gold price has now broken out of a downtrend, which shows the market's expectation of a lower US interest rate.
According to the technical analysis, the fundamental part could trigger a retracement of the gold price. Two scenarios could occur on the market.
1.
The price breaks the market structure before a pullback occurs to test the theoretical trendline.
2.
The market retreated before breaking the market structure as a result of the announcement of the US economic data.
Daily trade setup
XAUUSD 1 Hour Timeframe
Based on our perspective, you can see that we weigh the retreatment on the gold price in the big picture. Thus, we will focus on looking for Sell opportunities.
But if traders can handle a high level of risk management, traders could consider opening the position around 2,427, the Key resistance area. The Stop-Loss level should be set above the previous swing high of around 2,450, and the take-profit point could be around 2,380, nearly to the trendline.
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