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
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
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
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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This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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