FUNDAMENTAL
OVERVIEW
Gold recouped all the losses experienced in the first part of the week.
There was no meaningful catalyst for the downside nor for the upside. The price
action has just been rangebound near the 4,000 level as the hawkish repricing peaked
at the end of last week. Traders are now waiting for the US NFP and US CPI
reports to pick a direction.
Right now, the market is pricing in a 29% chance of a rate hike in July,
which rises to 65% in September. I’m pretty sure we will need notable upside
surprises in the data to force the Fed to hike already in July. September would
be the preferred month for them as they also release the SEP and the dot plot.
Given the Fed’s focus on inflation, the US CPI will likely be more
important for market pricing unless we get a blockbuster NFP report. In line or
worse than expected data, should lead to a pullback pretty much across the
board, with gold benefiting from some dovish repricing. On the other hand, upside
surprises should keep weighing on the market.
GOLD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold continues to consolidate near the 4,000 level as traders await
the key US data for the next direction. If the price falls into the 3,885
level, we can expect the buyers to step in with a defined risk below the level
to position for a pullback into the major downward trendline around the 4,250
level. The sellers, on the other hand, will want to see the price breaking
lower to increase the bearish bets into the major upward trendline around the
3,700 level.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we can
see the upward spike yesterday stalled right at the swing high around the 4,100
level. The sellers will likely continue to step in around these levels with a
defined risk above the swing high to keep pushing into new lows. The buyers, on
the other hand, will want to see the price breaking higher to increase the
bullish bets into the downward trendline.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here but if we get a spike lower on a good NFP report, we
might not see a downside breakout until the US CPI as traders might want to
wait for inflation data to confirm whether an earlier than expected rate hike
could come. On the other hand, if the NFP report comes in line or even worse
than expectations, we will likely see gold extending the pullback into new
highs and target the major downward trendline next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we get the US NFP
report and the US Jobless Claims figures.
This article was written by Giuseppe Dellamotta at investinglive.com.
