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