FUNDAMENTAL
OVERVIEW
In the past couple of days,
we got surprisingly soft US CPI and PPI data that should translate into a 0.2% monthly
increase in the Core PCE. This led to a dovish repricing in interest rate
expectations, with Fed rate hike probabilities for July falling to just 10%.
Gold spiked to the upside following
the soft US CPI report but failed to sustain the gains, and the soft PPI didn’t
help either. Overall, the risk/reward has flipped to the upside now and the
US-Iran crisis in the background is what is likely holding back the precious
metal.
Therefore, in the
short-term, US-Iran headlines should be more important. De-escalatory news
should support gold and lead to a rally into new highs. Conversely, further
escalation will likely weigh on the market and push prices into new lows.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold is still trading near the monthly lows despite the soft US CPI
and PPI reports. If we get a pullback into the trendline, we can expect the sellers
to step in with a defined risk above the trendline to position for a drop into
the 3,885 level. The buyers, on the other hand, will look for a break to open
the door for a move into the next trendline around the 4,500 level.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we have
a minor downward trendline defining the recent bearish move. The sellers will
likely 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 want to see the
price breaking higher to extend the pullback into the major downward trendline.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we have
a minor support zone around the 4,015 level. We can expect the buyers to step
in around the support with a defined risk below it to position for a rally into
the major downward trendline. The sellers, on the other hand, will look for a break
to increase the bearish bets into the 3,885 level next. The red lines define
the average daily range for today.
UPCOMING CATALYSTS
Today, we get the US
Retail Sales and Jobless Claims data. Tomorrow, we conclude the week with the
University of Michigan Consumer Sentiment survey.
This article was written by Giuseppe Dellamotta at investinglive.com.