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Gold fell close to the lowest levels of the year last week and popped backed above the $1,800 level, as traders remain uncertain ahead of this week’s key job report from the United States economy.
The bond market has also been a key driver of the gold market, due to the fact that traders are starting to not believe the narrative that the FED is going for 75 basis points at the next meeting.
Last week, the 10-year bond yield dropping 17 basis points to 2.804%, in such ash price environment it usually raises the opportunity cost of holding non-yielding bullion, such as gold and silver.
Both metals market has struggled in recent weeks due to fears of a coming recession and the rising US dollar. Meanwhile, with rates still rising at a 40-year high, it places excess stress on non-yielding gold again.
This week it is all about the $1,790 level in terms of the technical. Too much time spend below the level, and we could probably see the price of gold moving towards fresh 2022 lows.
Current sentiment metric towards gold show that traders are getting more bullish, and sentiment has not since last week. The ActivTrader market sentiment tool shows that 61 percent of traders are bullish towards gold.
While this is sentiment bias is now higher, retail is wrong in the majority, on the wrong side of the trade. Going forward we really need to see a negative bias by retail to help the chances of a stronger rebound.
Gold short-term Technical Analysis
The short-term technicals for the yellow-metal shows that a new low has been set, which is putting pressure on gold. Lower highs and lower lows are usually bearish in technical analysis.
Looking at the well-denoted rising channel break on the four-hour price chart, a bearish breakout under the trendline around the $1,820 level is indicating a move towards the $1,750 area.
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Gold Medium-term Technical Analysis
The daily chart shows that gold remains a sell while trading above the $1,840 level, which is the location of the key 200-day moving average, which has acted as a magnet for price recently.
I expect that the price correction in gold is going to drop sharply once of the $1,790 level is breached or rebound towards the 200-day moving average one more time.
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