Gold’s recent bounce might be a reaction to weaker American data

Gold’s recent bounce seems to be mainly a reaction to weaker than expected American data recently, primarily GDP and the NFP, but the reaction to inflation in line with the consensus was also positive. Major indices in the USA reached fresh record highs this week, so expectations of recession aren’t currently on traders’ radar.

12 April’s intraday high around $2,430 is a likely resistance in the short term. A breakout above there would probably open the door to more gains. The 161.8% weekly Fibonacci extension around $2,525 would be an obvious stretch target in the medium to longer term. As for supports, the 100% Fibo extension around $2,320 will probably remain in view along with the limit of April’s retracement around $2,280.

With the slow stochastic signalling overbought and ATR declining so far in May, an immediate push higher is questionable. The 20 and 50 SMAs could function as dynamic supports in the next few days, so new buyers might consider entering around those to de-risk trades somewhat compared to buying at the very top.