Gold News: Fed’s Warsh Rewrites Gold Market Outlook With Hawkish Shift
Spot Gold is in a downtrend according to both the major moving averages and the main swing chart. And that’s not going to change until the market starts to make higher-highs and higher-lows that lead to the recapturing of key resistance points.
The main swing top at $4382.62, followed by the 200-day moving average at $4463.02 and the 50-day moving average at $4540.55. These are the major resistance points.
The short-term range is $4023.87 to $4382.62. The market is currently straddling its retracement zone at $4203.24 to $4160.91.
While the major resistance points contain the intermediate and long-term outlooks, the retracement zone controls the short-term direction. If buyers come in to support this area then a secondary higher bottom could form, which could shift short-term momentum to the upside. If buyers don’t show up to stop the slide then $4382.62 becomes a major swing top, the bearish traders return and new sellers look for a breakdown under the June 11 main bottom at $4023.87.
Essentially, trader reaction to $4203.24 to $4160.91 sets the near-term tone. This is important because we can’t really think about a main trend change or a moving average breakout until the short-term trend turns bullish.
What to Watch
The next round of inflation data is going to tell gold traders whether Warsh’s committee was early or right on time. If the numbers come in hot, the hawkish projections get validated and the rate hike conversation picks up speed. That keeps the dollar bid alive and Treasury yields climbing, which is the exact combination that broke the rally this week. If inflation softens, gold gets a reason to test whether buyers are willing to step back in. But softening has to show up in the actual data. The Fed made clear this week that it is not going to ease on forecasts alone.
The retracement zone at $4,203.24 to $4,160.91 is where this gets decided. Buyers defending it would form a secondary higher bottom and put short-term momentum back in their favor. If they walk away, the June low at $4,023.87 is the next target and the bearish structure stays intact. The major moving averages are both overhead and the market has to reclaim the retracement zone before it can even think about challenging them.
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