Gold Rebounds as Dollar Sells Off on Hopes for US Interest Rate Cuts Within the Year【February 7, 2024】

Fundamental Analysis

• European economic indicators are broadly positive, leading to rebounds in EURUSD and GBPUSD.
• A senior US official has commented that confidence in interest rate cuts in the latter half of the year is strengthening.
• Expectations for interest rate cuts within the year have led to selling of the dollar.

XAUUSD Technical Analysis

Analyzing the daily chart of gold, drawing upward and downward trend lines reveals that it has broken below the upward trend line. The downward trend line is also capping the upside. Considering the fundamental backdrop, expectations for interest rate cuts within the year have led to a slight rebound in gold. However, there is a lack of direction, with very narrow range-bound trading.

Should there be a policy shift towards US interest rate cuts, it could signal the start of a rate cut cycle, potentially supporting a rise in gold. Currently, the US economy is strong, and the timing of rate cuts is uncertain, leading to a delay and making gold more prone to declines. However, overall, the situation is more conducive to rises, with a complex mix of fundamentals. Technically, there has been a breakout to the downside, but short-term trading is preferred.

Day Trading Strategy (1-Hour Chart)

Analyzing the 1-hour chart of gold, it is moving within the Ichimoku cloud, indicating consolidation. There is a significant resistance line near 2040 USD, and surpassing it is a difficult task, expected to be unlikely. A rebound is expected unless there is some exceptionally strong factor.

The RSI is at 55, indicating a slight dominance of upward momentum. After attempting to move higher, a scenario of increased selling pressure is anticipated. The day trading strategy would involve selling on a rally near 2042 USD, settling at 2030 USD, and placing a stop at 2045 USD.

Support and Resistance Lines

Upcoming significant support and resistance lines:

2040 USD: A major resistance line

Market Sentiment

XAUUSD Sell: 60% Buy: 40%

Today’s important economic indicators

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.