Gold to Recover from $1,825 Support – Buy Now?

Gold is making a slight bullish reversal, consolidating the 1% drop observed on Thursday. Gold bulls take a breather ahead of Friday’s important US Nonfarm Payrolls release as attention shifts to next week’s US Consumer Price Index (CPI) data. Any reaction to the US NFP data might be reversed swiftly as gold traders reposition ahead of the important US inflation data. 

The gold price drop on Thursday was fueled by good US ADP employment data, which showed that the tight American job market could prompt the US Federal Reserve (Fed) to raise interest rates for longer.

Employment in the US private sector (ADP) climbed by 235,000 in December, exceeding the market consensus of 150,000. Predictions of a hawkish Fed outlook drove the US Dollar and US Treasury bond yields through the ceiling, impacting heavily on Wall Street indices.

Gold Technical Outlook

The yellow metal gold price has found good support near $1,833 at the time of writing. That level represents the intersection of the previous week’s high, the previous month’s high, the SMA5 one-day, and the Fibonacci 23.6% one-day. As a result, a renewed upswing might test the immediate resistance level of $1,838, where the Fibonacci 38.2% one-day and pivot point one-week R1 intersect.

Acceptance over the latter might lead to a test of the $1,846 resistance level, which is the confluence of the Fibonacci 61.8% one-day and SMA10 four-hour moving averages. The pivot point one-month R1 at $1,850 will be a difficult nut to crack for buyers aiming for $1,855.

A prolonged move below the indicated strong support will propel a slide toward $1,825, the junction of the previous day’s low and the Fibonacci 23.6% one week. The next negative target is near $1,820, where the pivot point is one-day S1 and the Fibonacci 38.2% one-week meeting. Let’s look for a buy trade today over the 1,825 level.