FUNDAMENTAL
OVERVIEW
Gold has finally found some footing after a couple of headlines yesterday
pointed to an imminent US-Iran deal. The initial boost came from Qatari mediators saying that the language for a
possible US-Iran agreement had been drafted.
Momentum then gathered pace when US Treasury Secretary Bessent confirmed that an Iran deal could come as soon as today and would include the reopening
of the Strait of Hormuz.
The market reaction was pretty straightforward: risk assets surged and oil
prices fell on easing inflation concerns and reduced Fed tightening risk. The
latter has also supported gold, as real yields and the US dollar declined.
Barring another escalation, the upside should remain supported in the short
term. The next test will come next week with the release of the US CPI report.
The data will be critical for the September FOMC decision and the Jackson Hole
Symposium.
A hot report would likely trigger a selloff in gold as traders would increase
bets on a September rate hike. A soft report, on the other hand, would reduce further
the risk of Fed tightening and give gold another boost.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold has now confirmed the break above the downward trendline and has
opened the door for a rally into the next major trendline around the 4,500
level. If the price gets there, we can expect the sellers to lean on the trendline
with a defined risk above it to position for a drop into the 3,885 level. The
buyers, on the other hand, will look for a break to increase the bullish bets
into new record highs.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we can
see the price action has been mostly rangebound since late June due to the
US-Iran crisis, but the recent positive developments could lead to a breakout. The
buyers will need the price to break above the 4,200 resistance to gain more
conviction for a reversal of the trend. The sellers, on the other hand, will
likely step in around the resistance with a defined risk above it to position
for a drop into the 3,885 level next.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we can
see the price broke above the minor resistance zone around the 4,120 level
following the news about an imminent US-Iran deal. If the price pulls back to
retest the resistance-turned-support, we can expect the buyers to step in with
a defined risk below the minor upward trendline to keep targeting a break above
the 4,200 resistance. The sellers, on the other hand, will want to see the
price breaking lower to pile back in for a drop into the 3,885 level next. The
red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we have the US
ADP and ISM Services PMI. Tomorrow, we get the latest US Jobless Claims
figures. On Friday, we conclude the week with the US NFP report.
This article was written by Giuseppe Dellamotta at investinglive.com.