Fundamental
Overview
Not much has happened since
the end of the Israel-Iran conflict which caused the geopolitical risk premium
to vanish and weighed on gold as the safe haven flows reversed further. The
price action remains mostly rangebound as we await the next catalysts to get a more
sustained direction.
This week started very well
for gold as dip-buyers stepped in around the major upward trendline to target
new all-time highs. This looks more like a technically driven move though as we
haven’t got any meaningful catalyst in the meantime.
In the bigger picture, gold
remains in an uptrend as real yields will likely continue to fall amid Fed
easing and just a hawkish repricing in rate cuts expectations could trigger
corrections in the short term.
The economic data will be
particularly important for the gold market as Fed members sound inclined to cut
earlier than expected or even more if the inflation data remains soft or the
labour market data deteriorates further. But if the data starts to come out on
the hotter side, then a hawkish repricing should weigh on the market.
Gold
Technical Analysis – Daily Timeframe
Gold Daily
On the daily chart, we can
see that gold eventually pulled all the way back to the major upward trendline where the buyers stepped in
with a defined risk below the trendline to position for a rally into a new
all-time high. The sellers, on the other hand, will want to see the price
breaking lower to start targeting an even deeper pullback into the 3120 level
next.
Gold Technical Analysis
– 4 hour Timeframe
Gold 4 hour
On the 4 hour chart, we can
see that we have a minor downward trendline defining the bearish momentum. The
sellers will likely step in around these levels with a defined risk above the
3350 swing high to position for a break below the major trendline. The buyers,
on the other hand, will look for a break higher to increase the bullish bets
into the 3438 level next.
Gold Technical Analysis
– 1 hour Timeframe
Gold 1 hour
On the 1 hour chart, we can
see that we have yet another minor upward trendline defining the bullish momentum
on this timeframe. The buyers will likely continue to lean on the trendline to
keep pushing into new highs, while the sellers will look for a break lower to
increase the bearish bets and target a break below the major trendline. The red
lines define the average daily range for today and since we are near the upper bound, it might not be a good idea for the buyers to enter at these levels.
Upcoming
Catalysts
Today, we have the US ISM Manufacturing PMI and the US Job
Openings. Tomorrow, we get the US ADP data. On Thursday, we conclude with the
US NFP, the US Jobless Claims and the US ISM Services PMI before the US holiday
on Friday.
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