- Gold prices have moved into a sideways consolidation and are directionless as markets take a breather.
- Gold technicals are mixed, although the price struggles below the 23.6% Fibo of Jan rally.
Gold prices ended the US session around the 4hr picot point ta $1,313 having attempted a test of the 21-4hr SMA before the price chopped between a range of $1,316 and $1,312 for the session.
The US dollar was gaining for a second day although US yields were under pressure, despite stocks on the move. As far as data, the US ISM services sector PMI pulled back more than expected in January, the partial government shutdown and trade frictions to blame in the main and it was falling to 56.7 from 58. Markit’s final PMI for January was left unrevised at 54.2. Meanwhile, the US 10yr treasury yield initially popped from 2.71% to 2.73% but then retreated back to 2.69%. 2yr yields are net a touch lower, around 2.52%. “Futures markets continued to price little chance of any further Fed rate hikes in this cycle, with a 10% chance of a hike in December and a 10% chance of a cut,” analysts at Westpac noted.
Eyes look to President Donald Trump’s State of the Union address
There was mixed sentiment ahead of President Donald Trump’s State of the Union address where investors will be watching for hints over Sino/U.S.-China trade relations progress, along with the partial government shutdown with respect to further infrastructure spending and border wall funding. The event is following yesterday’s, “informal meeting” that Trump had with Fed Chairman Powell where both discussed “recent economic developments and the outlook for growth, employment and inflation
Gold levels
gold prices have moved along sideways in a consolidation of the correction of the late Jan post-Fed highs. However, the daily chart shows that the price is moving towards the bottom of the ascending channel’s support line as it slips below the 23.6% Fibo retracement of Jan rally. The upside attempts today were met with strong supply, leaving price below the 21-4hr SMA, although the 4hr indicators still remain bullish. However, on a break of 1307, this will open the 50% retracement at 1301 as a level to target guarding the 1297 9th Jan highs.
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