May 4, 2023

Gold Nears All Time Highs... What Now?

Frank Cabibi

Yesterday's FOMC resulted in a spike in gold's price. The metal hit $2,067 before pulling back at the start of the morning. Since then, gold has been on a tear to the upside looking to retest the highs. Here is what we can look for going into tomorrow and next week.

EdgeFinder Analysis

Gold is now reading a strong buy on the EdgeFinder after yesterday's FOMC meeting in which a statement of the need for more rate hikes was redacted in the Fed's report. This hinted towards a pause in rate hikes for the time being, and the bulls saw strength in the metal.

Price gapped up on the 1D timeframe showing tremendous demand. This however, could be a sign that it might have moved too much too quickly. Either way, price is facing its most significant level of resistance yet. Things to look out for are tomorrow's unemployment rate which could either strengthen or weaken the score on gold.

CHFJPY is also one of the EdgeFinder's strong buys at +7. Price has come all the way to support on the 1D timeframe which served as a previous double top. It still looks like a healthy pullback for now, but a break under the rising trend line could suggest weakness in the trend.

Additional support lies around a previous bottom around 149.261. The higher high established is a bullish sign for the pair although it could spell short term weakness. As long as COT shows a pursuance of interest in the euro and growing disinterest in the yen, this pair will keep looking strong.

USDCAD is back to a +6 strong buy on the EdgeFinder. The trend projection reads oppositely of the 10 year seasonality average. CAD is also one of the most shorted assets by institutions who are leaning toward a bullish USD.

Tomorrow's NFP and unemployment rates come out tomorrow for the US and Canada. Investors are expecting a higher UE rate for both countries. If both come in higher than expected, it could cause lots of volatility going into the next week.

Retail Spotlight

It appears that retail is mostly long USD with the exception of USDCAD. As for commodities, the crowd is split with strong stances between gold and oil. Because of the recent downturn, traders could be looking to find a reversal on USOil, in which case could be the right move due to COT activity.

Smart Money Tracker

Speaking of COT, USOil remains the top most bought asset on the Smart Money Tracker as it ties with gold. Commodities are hot for the time being likely due to economic uncertainty, banking collapses and mixed Fed interpretations. Canada remains one of the most shorted assets.

Fundamental Spotlight

Above are the two rates of unemployment in the US and Canada. Both are expected to slightly rise in tomorrow's report from last month's numbers. Weaker economic data might be bearish for the USD as investors will anticipate a rate pause from the Fed. Canada may react the same way.

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