Gold defends gains above $2,250; Attention turns to Friday’s NFP data

• Rally to Record Highs: Gold has been witnessing a significant rally, pushing to new all-time highs above $2280. The current bullish wave reflects a market adjusting to the prospect of monetary policy easing, a scenario that historically favours precious metals. However, strong US economic data may postpone the anticipated rate cuts, potentially leading to short-term retracements in gold’s price.
• Immediate Support Levels: The dip during the start of the week was met with strong support above the $2230 level, marking it as crucial support for medium-term corrections. Holding above this level suggests a ongoing bullish momentum, with an eye on the $2300 target. In the short term, intraday support is outlined at yesterday’s low of $2050, where a break below could act as the first sign of weakness in bullish momentum.
• Overbought Signals: Momentum oscillators across the daily, weekly, and monthly charts are signalling to overbought conditions. This indicates that the recent upward movement may be reaching an exhaustion point. Although overbought conditions are typically viewed as cautionary signals rather than direct indicators, their importance could be amplified if they coincide with the emergence of a short-term reversal pattern.
• Potential for Correction: A break below the $2230 support level could signal the start of a medium-term correction. In such a scenario, the next significant support area is identified to be just above the $2200 mark. This zone is noteworthy not only for its psychological importance but also because it coincides with the 200-hour exponential moving average, adding an extra layer of technical significance.
• Economic Data Watch: All eyes are on the upcoming Non-Farm Payrolls (NFP) report, a critical indicator of the US labour market’s health. Strong economic figures may exert downward pressure on gold prices, whereas weaker data could bolster its appeal. This report, alongside analysis of inflation trends and interest rate projections, will play a decisive role in shaping gold’s short-term trajectory.

Gold 1 Hour Chart

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