Gold Bounce from Support Stalls Below the 2600 Big Figure

Gold Talking Points:

Gold prices touched 2600 briefly after the release of the FOMC statement yesterday, followed by a fast pullback to the support zone I’ve been tracking around the 2544-2550 area.
The reaction to that support was intense and technically is still on-going, as the initial bounce stalled at 2590 and the pullback from that quickly shot back up. Bulls have not relinquished the reins yet, even if they haven’t been able to take out the 2600 psychological level up to this point.
I’ll be looking into these setups in the Tuesday webinar and you’re welcome to join, click here for registration information.

FOMC reactions can be messy and the past 24 hours illustrates that well if looking at gold prices. Initially, on news of the 50 bp rate cut, gold prices were bid, up to a test of the 2600 level for the first time ever. But that test only lasted for a few minutes before bears took over, creating a sizable sell-off until gold eventually found support at the 2544-2550 zone.

That was a big area on the chart, and I had highlighted that ahead of the announcement in the article entitled ‘Gold Price Outlook: Pullback Potential into FOMC.”

That test lasted for a little bit longer; for about 13 minutes towards the end of the US trading day. But a rally began to build during the Asian session and as European markets opened for the day, gold prices jumped, pushing right back-up towards the same 2590 that had marked resistance ahead of the rate announcement yesterday.

It’s been messy since then: A pullback from 2590 found support at 2570 and, once again, bulls responded, driving back to 2590.

Gold Two-Hour Price Chart

Chart prepared by James Stanley; data derived from Tradingview

Gold: Lower-High Potential but Bears Haven’t Had Much Run Of Late

It’s been a really bullish year for gold and even pullbacks from major and significant breakouts have been rather minor, in the big picture. And as I said in that pre-Fed article I’m not exactly looking to be extremely bearish on gold given how strong bulls have been so far this year.

But – that also doesn’t mean that I’m looking to chase when price is far away from any nearby swing-lows. And given the potential for profit-taking on Friday ahead of the weekly close, there could be motive for trying to be patient, waiting for support and then looking at continuation scenarios.

At this point that same 2544-2550 zone could suffice but given that it’s already seen a bounce, if that does come into play then we’d be looking at a lower-high provided bulls weren’t yet able to re-test 2600. That would point to the possibility of a bounce from that zone up to another lower-high, if it bounces at all. For that, I would then look to short-term resistance of 2570 or 2580, both levels that have had some degree of interest over the past couple days.

As for key support, this isn’t all that creative but much like we saw from the most recent major move – it was prior range resistance that helped to set the floor that bulls drove from. That was in the 2477-2483 zone and the resistance to go along with that support (at prior resistance) was the 2527-2531 level.

This was also a zone I had discussed in the gold strategy piece ahead of FOMC yesterday but it hasn’t yet come into play. A deeper pullback to that level would have a few items of interest for bullish continuation scenarios. And, notably, the 2531 level is confluent with the 50% mark of the Fibonacci retracement produced by the September major move; and both the 23.6% and 38.2% marks of that same study have had some claim for support already.

Gold Four-Hour Price Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.