Fundamental
Overview
Gold has been on a
steady retreat since hitting a new all-time high last Wednesday. We saw a
reversal in many other markets since last Wednesday and it’s not clear what has
been behind the move. The data continues to point to a resilient economy with inflation
falling slowly back to target. That should see the Fed cutting rates at least
two times this year.
On the other hand,
the risks to the growth picture increase the longer the Fed keeps policy
restrictive. The new driver could be Trump now looking more and more like a
potential winner and his policies are seen as inflationary which could see the
Fed eventually going even more slowly on rate cuts.
Gold
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that gold fell back below the 2430 level last week and extended the drop as
the sellers started to pile in more aggressively. The natural target should be
the key 2277 support. The buyers will look for dip-buying
opportunities on the lower timeframes but a move back above the 2430 resistance
would give them more conviction on further upside.
Gold Technical Analysis
– 4 hour Timeframe
On the 4 hour chart, we can
see that the price broke through the trendline recently and switched the bias more
bearish in the short-term. We are now seeing some consolidation at the 2387
level.
This is where we can expect
the buyers to step in with a defined risk below the level to position for a
rally into new highs. The sellers, on the other hand, will want to see the
price breaking lower to increase the bearish bets into the 2348 level next.
Gold Technical Analysis
– 1 hour Timeframe
On the 1 hour chart, we can
see more clearly the current price action. The buyers will want to see the
price breaking above the most recent lower high at 2412 to regain some control
and increase the bullish bets into new highs targeting a break above the 2430
resistance.
The sellers, on the other
hand, might want to wait for the price to get back to the 2430 resistance to
step back in with a better risk to reward setup or increase the bearish bets on
a break below the 2387 level. The red lines define the average daily range for today.
Upcoming
Catalysts
This week is pretty empty on the data front. We begin tomorrow with the release
of the US Flash PMIs. On Thursday, we will get the latest US Jobless Claims
figures. Finally, on Friday we conclude the week with the US PCE report.
See the video below
This article was written by Giuseppe Dellamotta at www.forexlive.com.
