Gold dips in healthy correction

Gold prices eased to 4,060 USD per ounce on Wednesday, marking a technical correction following the previous session's gains. Investor caution prevails ahead of a series of high-impact macroeconomic releases, with particular focus on today's FOMC meeting minutes and Thursday's US employment report. These publications are expected to provide crucial insights into the Federal Reserve's future interest rate path.

US agencies have resumed data publication following the government shutdown. Recent figures showed initial jobless claims climbed to a two-month high in mid-October, while continuing claims rose to 1.9 million. This softness in the labour market has modestly bolstered expectations for a December rate cut. However, markets remain wary that stronger subsequent reports could constrain the Fed's ability to ease policy, particularly amid persistent hawkish rhetoric from officials.

A further factor supporting gold is the growing unease over stretched valuations in the technology sector. This is fuelling a mild risk-off sentiment and supporting demand for gold as a safe-haven asset, offsetting some of the metal's recent weakness.

Technical analysis: XAU/USD

Four-hour chart

On the H4 chart, XAU/USD is forming a consolidation range around 4,060 USD. An upward breakout is anticipated, targeting 4,140 USD as part of a fifth wave within a larger growth structure aiming for 4,284 USD. The MACD indicator supports this constructive view. Its signal line is below zero but has diverged from the histogram and is turning upward, suggesting building bullish momentum.

One-hour chart

On the H1 chart, the market has established a consolidation range around 4,060 USD. With the upper boundary at 4,082 USD now breached, the path is open for the next leg higher. The initial target is 4,122 USD, potentially followed by a corrective pullback to retest 4,060 USD from above. A successful retest could catalyse a further advance towards 4,188 USD and ultimately 4,284 USD. The Stochastic oscillator confirms this near-term bullish bias, with its signal line positioned above 50 and pointing firmly upward.

Conclusion

Gold's current pullback appears corrective within a broader uptrend, driven by cautious positioning ahead of key US data. The technical structure suggests underlying strength, with a clear setup for a potential rally towards 4,284 USD upon a sustained break above 4,082 USD. While the immediate direction hinges on the FOMC minutes and jobs data, the metal's role as a portfolio hedge continues to provide underlying support amidst equity market jitters.