FUNDAMENTAL
OVERVIEW
Gold erased most of the
gains from the likely technical-driven rebound of the last couple of days. The
rebound lacked support from the near-term fundamentals as the prolonged US-Iran
conflict pushed oil prices even higher and traders increased rate hike bets.
There’s not much to look at
on the fundamental side than just monitoring the US-Iran developments. A
de-escalation would lead to a dovish repricing and trigger a relief rally in
gold, but as long as the conflict continues, the tightening in financial
conditions will keep the market under pressure.
There is also some fear that the Fed could surprise with a rate hike at the
upcoming July meeting if the situation in the Middle East doesn’t improve.
Although the probability is low, if it were to happen, gold prices would sink
into new lows.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold erased most of the recent rebound as the fundamental picture
remained unchanged. The trendline is acting as resistance and the sellers will
likely continue to lean on it to keep pushing into new lows. The buyers will
want to see the price breaking higher to open the door for a rally into the
next major trendline around the 4,500 level.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we can
see the price action has been mostly rangebound since late June, and this
leaves traders with little to do other than waiting for a breakout or a
fundamental catalyst. The buyers will need the price to break above the 4,200
resistance to gain more conviction for a reversal of the trend, while the
sellers will look for a break below the 3,885 level to extend the selloff into
the 3,700 level next.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we have
a minor downward trendline defining the bearish momentum. The sellers will
likely continue to lean on the trendline with a defined risk above it to keep
pushing into new lows, while the buyers will look for a break to pile in for a
rally into the 4,200 resistance next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we conclude the
week with the Flash US PMIs. The focus remains on US-Iran headlines.
This article was written by Giuseppe Dellamotta at investinglive.com.