The gold price continues to trade in a consolidative pattern formation around the $1,575 level amid a lack of directional bias in the market sentiment. The price of the yellow metal faces strong resistance around this level while an ascending trendline provides support.
This appears to be setting the price of gold for a breakout in the coming days with the bulls likely to be the ones to benefit. Gold is also closing in on the overbought levels of the RSI indicator in the 60-min chart.
Gold Price Fundamentals Overview
From a fundamental perspective, the gold price to the US dollar is trading at the back of some key developments in the US market. On Wednesday, the US monthly budget statement for January posted a bigger deficit of $33 billion. Analysts were expecting a deficit of around $11.5 billion. And on Thursday, the consumer price index ex-food and energy for January beat the (YoY) expectation of 2.2% with 2.3%. The (MoM) performance was in line with expectations at 0.2%.
The general consumer price index for January beat the (YoY) expectations but missed the (MoM) equivalent. The initial and continuing jobless claims also outshone expectations while JOLTS Job Openings came short. On Friday, traders will be looking forward to the import and export price index data alongside retails sales for January.
The impact of coronavirus on global stock prices continues to dissipate while US earnings reports also provide an impetus for capital investments. This explains the gradual slowdown in the upward momentum of the gold price.
Gold Price Technical Analysis (the 60-min Chart)
Technically, the gold price appears to be trading in a consolidative pattern formation amid a lack of directional bias. The bulls are edging the battle slightly but a breakout could determine the immediate future of the price of gold. The price of the yellow metal is also trading very close to the overbought levels of the 60-min chart. This could trigger a pullback.
Therefore, the bears will be targeting short-term profits at around $1,569, $1,564, or lower at $1,558. On the other hand, the bulls will look to generate some momentum in the market by targeting profits at $1,581 or higher at $1,587.
Gold Price Technical Analysis (the Daily Chart)
In the daily chart, the price of gold appears to be trading within a consolidative triangle formation. This comes after a 2-month rally that culminated with a new multi-year high of $1,611. Gold has also rallied closer to overbought levels of the RSI indicator in the daily chart. This could trigger a bearish breakout.
Therefore, the bears will be targeting long-term profits at around $1,560, $1,539 or lower at $1,517. On the other hand, the bulls will look to drive upward momentum by targeting profits at around $1,593 or higher at $1,611.