FUNDAMENTAL
OVERVIEW
Gold jumped yesterday following Trump’s suspension of planned attacks on
Iran and the announcement of an agreement in principle for the MoU to be signed
in the next few days. Fed rate hike expectations got pared back immediately
with the US dollar and Treasury yields falling quickly.
Looking at all the reports, the prospects of a deal are stronger than ever
but there’s always some justified scepticism given countless fake Trump’s
claims we had to endure in the past months. Nevertheless, traders are now
unwinding some of the more aggressive bets as optimism replaced fear.
In the short-term, the focus will be on this new development, so we can
expect a bigger pullback. Looking ahead, the Fed will be a major catalyst, but
the market might forgive some hawkish tone if there’s an actual deal.
If this is real, oil prices will likely continue to fall hard and might
reach pre-war levels. The risk then is that negative supply shock turns into a
positive demand shock that boosts economic activity further requiring rate
hikes anyway, but that will need to be confirmed by the data in the next months.
GOLD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold is retesting the broken trendline. We can expect the sellers to
step in around these levels with a defined risk above it to keep pushing into
the 3,885 level next. The buyers, on the other hand, will want to see the price
breaking higher to pile in for a rally into the major downward trendline around
the 4,700 level.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we have
a minor downward trendline defining the bearish momentum. The sellers continue
to lean on the trendline with a defined risk above it to keep pushing into new
lows. The buyers, on the other hand, will need the price to break above the
trendline to open the door for new highs.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we
have a minor upward trendline that could act as support. If the price gets
there, we can expect the buyers to lean on it with a defined risk below it to target
a break above the downward trendline. The sellers, on the other hand, will look
for a break to increase the bearish bets into new lows. The red lines define
the average daily range for today.
UPCOMING CATALYSTS
Today, we conclude the
week with the University of Michigan consumer sentiment survey.
This article was written by Giuseppe Dellamotta at investinglive.com.
