4 min read Gold has kept hold of last week’s advance after July consumer inflation came in line with expectations, softening the case for a Federal Reserve rate rise next month. Today’s producer price report lands after this article goes out, and it is the next test of that view.
The 4-hour chart
Gold pulling back into the previous range highs on the 4-hour chart, with RSI trending lower while price held its uptrend.
Gold has travelled a long way since our previous coverage of gold’s breakout, and the 4-hour chart now shows that move losing momentum. The RSI has been trending lower while price has continued higher, a divergence that tends to appear when a trend is tiring rather than turning outright.
Price is currently testing the local support zone formed by the previous range highs. If that zone holds, a new range could potentially develop between the two orange levels marked on the chart, with the lower one acting as the floor. A break below the current support could potentially take price down toward the 4,340 area.
The 1-hour chart
The bounce from 4,370 on the 1-hour chart, with 4,400 the next resistance overhead.
Zooming in, price has bounced from the 4,370 level and there is some bullish momentum building here. The next immediate resistance to the upside sits at 4,400.
A failure to hold 4,370 as support could potentially open a move down toward 4,340, and then 4,300 below that. These are likely to be the most important levels to watch through the rest of the session.
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