Fundamental
Overview
It looks like gold reached
an inflection point yesterday. After a strong rally on Monday, the precious
metal erased all the gains and eventually fell to new lows. Trump delivered
some key comments late yesterday where he not only sounded much less hawkish on
China but also made clear that he has no intention to replace Fed Chair Powell
(he couldn’t do it anyway).
The stagflationary pricing
got gold to these prices, and as we start to price out that risk, then we could
see a notable correction especially considering that “long gold” has been the
most crowded trade. The parabolic rally was a clear hint.
In the bigger picture, gold
remains in an uptrend as real yields will likely continue to fall amid Fed
easing. But in the short-term more positive news on the tariffs front should see
more downside for gold as the market readjusts to new conditions.
Gold
Technical Analysis – Daily Timeframe
Gold Daily
On the daily chart, we can
see that gold erased all the Monday’s gains. From a risk management
perspective, the buyers will have a better risk to reward setup around the previous
high at 3167 to position for further upside, while the sellers will look for a
break lower to increase the bearish bets into the major trendline around the
3100 level.
Gold Technical Analysis
– 4 hour Timeframe
Gold 4 hour
On the 4 hour chart, we can
see that the price bounced near the most recent swing low around the 3284
level. This is where the buyers stepped in with a defined risk below the level
to position for a rally into new highs. The sellers, on the other hand, will
want to see the price breaking lower to increase the bearish bets into the 3167
level next.
Gold Technical Analysis
– 1 hour Timeframe
Gold 1 hour
On the 1 hour chart, we can
see that we have a minor downward trendline defining the bearish momentum on
this timeframe. The sellers will likely lean on the trendline with a defined
risk above it to target the 3167 level next. The buyers, on the other hand, will
look for a break higher to pile in for a rally into a new all-time high. The
red lines define the average daily range for today.
Upcoming
Catalysts
Today we have the US Flash PMI, while tomorrow
we get the latest US Jobless Claims figures. As a reminder though, the market
is focused on tariff related news at the moment, so the data is not as
market-moving as it used to be in the past months.
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