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