FUNDAMENTAL
OVERVIEW
Gold fell briefly below the 4,000 level on Wednesday but couldn’t extend
the losses further as we started to see pullbacks in real yields and the US
dollar. It looks like we have reached the peak in the hawkish repricing, and
the next leg will need upside surprises in the US NFP and US CPI reports.
Fed’s Williams yesterday reiterated that the current policy setting is well
positioned and the US Core PCE came in line with expectations. All in all, there
isn’t a strong reason to price in any more rate hikes at the moment. We’ve also
been seeing a pullback in the rate hike bets as the total tightening expected
by year-end fell from a peak of 42 bps after the FOMC decision to 32 bps now.
Therefore, we either see the pullbacks extending further in the next days or
the price action remains rangebound until we get the US data. Chasing lower
prices at the moment without a meaningful fresh catalyst looks bad from a risk
to reward perspective.
GOLD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold dropped below the 4,000 level and started to consolidate. The natural
target remains the 3,885 level. If we get a pullback into the downward
trendline, we can expect the sellers to lean on it with a defined risk above it
to keep pushing into new lows. The buyers, on the other hand, will want to see
the price breaking higher to open the door for a rally into the next trendline
around the 4,600 level.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we can
see the price is breaking above the minor downward trendline that was defining
the bearish momentum on this timeframe. This might be an early signal of a bigger
pullback to come. The buyers will likely pile in here with a defined risk below
the recent lows to position for a rally into the major trendline around the
4,300 level. The sellers, on the other hand, will want to see the price falling
back below the trendline to extend the drop into the 3,885 level next.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we
have a minor upward trendline defining the current pullback. 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 pile in for a drop into the 3,885
level next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we conclude the
week with the final University of Michigan consumer sentiment survey.
This article was written by Giuseppe Dellamotta at investinglive.com.
