Gold Technical Analysis – Pullback in safe haven flows

Fundamental
Overview

Gold recently got a boost
from safe haven flows triggered by the Israel and Iran attacks. The market reacted
immediately to the first Israel attack assigning a geopolitical risk premium.

This is now fading in the
back though because from a market perspective, as long as the supply of oil is
not impaired, the war can go on without any meaningful macro impact.

Moreover, there are
tentative signs that Iran wants to de-escalate as
the Iranian Foreign Minister said that they would prepare the ground for a
return to diplomacy and negotiations if the Israeli aggression stopped.

This is leading to a
pullback in safe haven flows. More positive signs of de-escalation will likely
weigh on gold as the recent rally would probably get erased. In the bigger
picture though, gold remains in an uptrend as real yields will likely continue
to fall amid Fed easing and just a repricing in rate cuts expectations could trigger
corrections in the short term.

Gold
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that gold eventually reached the key 3438 level amid the Middle East
tensions. That’s where the sellers stepped in with a defined risk above the
level to position for a drop back into the major upward trendline.
The buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into a new all-time high.

Gold Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see that with the new high, we now have another minor upward trendline defining
the bullish momentum. If we get a pullback into the trendline, we can expect
the buyers to lean on it to position for further upside. The sellers, on the
other hand, will look for a break lower to increase the bearish bets into the
next trendline.

Gold Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see that we have yet another minor trendline defining the bullish momentum on
this timeframe. That’s where we can expect the buyers to step in with a defined
risk below the trendline to keep pushing into new highs, while the sellers will
look for a break lower to increase the bearish bets into new lows. The red
lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow, we get the US Retail Sales report, while on
Wednesday, we have the US Jobless Claims and the FOMC Policy Decision.

Watch the video below