Gold in Consolidation Mode for Swing Traders

The price of gold is slowing after a recent rally as resistance forms at the $1,800 level.

Swing traders can capitalise on this trend with a correction towards $1,750 and the potential to buy the dip.

Gold: Daily Chart

Gold: Daily Chart

Gold prices currently trade at $1,787 an ounce. It is consolidating after the recent Federal Reserve meeting and interest rate hike. Last week, there was also a rate hike at the ECB and BoE rate meetings.

Bullion prices have improved as investors saw an end to the Federal Reserve’s aggressive rate hike plans. That bullishness has slowed after Fed Chair Jerome Powell said that, although the pace of hikes would slow, rates would remain higher for longer. That removed investors’ hopes for a sharp Fed pivot on interest rates.

Wednesday and Friday this week have the potential to move gold as we get the latest Bank of Canada inflation report, followed by PCE pricing numbers from the United States. If inflationary pressures are slowing, that could boost gold prices.

In the latest Commitment of Traders (COT) report from the CFTC, commercial positions were mostly short, which could be a headwind for gold. 68.1% of retail traders were short the precious metal, which could hint that prices are high in the near term. Non-commercial investors were 69% long, usually investment funds and private investors. However, noncommercial has grown since the market was low but is now at a moderate level.

Swing traders still have a chance to play a pullback and see how the market is supported in the coming sessions. A further pullback in stocks could still drag gold prices lower in the near term.

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