We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • RT @next_china: U.S., China chief trade negotiators spoke by phone on Saturday, Xinhua reports https://t.co/dMQtd0g4jY
  • The $AUDUSD and $EURUSD downtrend may prolong as traders counterintuitively buy into their descent. Meanwhile, the USD/CAD uptrend may accelerate on rising net-short bets. Get your market update from @ddubrovskyFX here: https://t.co/dlzJ31kf3f https://t.co/xp8P9MmCgb
  • As we head into next week, Cable is continuing to digest the massive leg higher last month, which at some point soon could mean another surge. Get your $GBPUSD technical analysis from @PaulRobinsonFX here: https://t.co/LJ42YhDe3X https://t.co/5hGwhGBpLB
  • Asia’s vast and growing importance to the world economy is not yet matched by the presence of a currency trading center to rival the established order. Get your update on market drivers in Asia from @DavidCottleFX here: https://t.co/E2hqoRdO7q https://t.co/urMnUCq4fn
  • RT @markets: White-hot pot stocks have flamed out in spectacular fashion https://t.co/3GsVsRyZaZ
  • What is the best time to trade #forex? Find out: https://t.co/M9R46r5ewa #tradingstyle https://t.co/gJ1QDrox67
  • #Gold prices may be given a tailwind from the FOMC minutes and escalating trade war risks if they fuel demand for anti-fiat assets amid expectations of additional Fed easing. Get your $XAUUSD market update from @ZabelinDimitri here: https://t.co/OJ7WUY9W7E $gld https://t.co/kBp3opzptm
  • Why should you set trading goals? How can it help regardless of what your #tradingstyle is? Find out: https://t.co/AYdD7ODlv1 https://t.co/G0ftVurNNN
  • Manning the penalty box today...i hope there aren't too many visitors https://t.co/1y81Li7laL
  • Do you think your #tradingstyle is of a #FOMO trader? Find out how you can turn that to #JOMO? Find out: https://t.co/79Q4pYdVEd https://t.co/S82AOd5AeP
Gold Price Outlook Mired by Head-and-Shoulders Formation

Gold Price Outlook Mired by Head-and-Shoulders Formation

2019-04-24 22:00:00
David Song, Currency Strategist
Share:

Gold Price Talking Points

Gold attempts to retrace the decline following the Federal Open Market Committee (FOMC) Minutes, with the price for bullion bouncing back from a fresh yearly-low ($1266), but there appears to be a broader shift in market behavior as a head-and-shoulders formation starts to unfold.

Image of daily change for major financial markets

Gold Price Outlook Mired by Head-and-Shoulders Formation

Image of daily change for gold prices

Gold fails to preserve the opening range for 2019 as Federal Reserve officials talk down the risk for a looming recession, and it seems as though the central bank is in no rush to alter the forward-guidance for monetary policy as Boston Fed President Eric Rosengren, a 2019 voting-member on the Federal Open Market Committee (FOMC), insists that ‘the pace of growth in economic activity will be enough to bring further reductions in the unemployment rate in the near term.’

It appears as though the FOMC will stick to the sidelines at the next interest rate decision on May 1 as ‘theCommittee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective as the most likely outcomes,’ and the central bank may largely promote a wait-and-see approach over the coming months as ‘a majority of participants expected that the evolution of the economic outlook and risks to the outlook would likely warrant leaving the target range unchanged for the remainder of the year.’

Image of fed fund futures

It remains to be seen if Chairman Jerome Powell & Co. will continue to project a longer-run interest rate of 2.50% to 2.75% amid the inversion in the U.S. Treasury yield curve, and the FOMC may face increased accusations of a policy error as Fed Fund Futures reflect bets for a December rate-cut. Nevertheless, the lack of urgency to alter the forward-guidance may keep the U.S. dollar afloat even though the FOMC plans to wind down the $50B/month in quantitative tightening (QT) over the coming months as ‘some participants indicated that if the economy evolved as they currently expected, with economic growth above its longer-run trend rate, they would likely judge it appropriate to raise the target range for the federal funds rate modestly later this year.’

With that said, little to no evidence of a U.S. recession may continue to drag on the price for gold as it raises the scope for higher interest rates, and failure to retain the yearly opening range may indicate a broader shift in market behavior as a head-and-shoulders formation starts to unfold.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss potential trade setups.

Image of gold daily chart
  • The broader outlook for gold remains mired by the head-and-shoulders formation as there appears to be a neckline break, with the Relative Strength Index (RSI) highlighting a similar dynamic as it continues to track the bearish trend from earlier this year.
  • Failure to preserve the yearly opening range brings the downside targets on the radar as the price for bullion struggles to trade back above the former-support zone around $1279 (38.2% retracement), with the first area of interest coming in around $1260 (23.6% expansion).
  • Next region of interest comes in around $1249 (50% retracement) to $1250 (38.2% retracement), which lines up with the 200-Day SMA ($1250).

For more in-depth analysis, check out the 2Q 2019 Forecast for Gold

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other markets the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.