FUNDAMENTAL
OVERVIEW
Gold rallied yesterday after a couple of reports strengthened expectations
of a de-escalation in the Middle East and potentially an earlier end to the conflict.
That contributed to push oil prices into new lows, easing inflation and rate
hike concerns.
Unfortunately, Trump poured some cold water on those expectations
after he repeated that the US would make a deal with Iran after the November
elections. Treasury yields and the US dollar rose following his remarks and weighed
on gold.
The focus remains
on US-Iran developments of course as oil prices have been the main driver of
inflation and interest rate expectations. Keep in mind that economic data will also
be important given the current market’s pricing.
When positioning and market expectations become stretched, even a modest
shift in the data can trigger a significant reversal. If US data starts
surprising to the downside, expectations for aggressive rate hikes will likely
be reduced, giving gold an additional boost. The first test will come today
with the Flash US PMIs.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see gold(CFD contract) pulled all the
way back to the key support zone around the 4,300 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 4,510 level. The sellers, on the other hand, will want to see
the price breaking lower to pile in for a drop into the 3,885 level next.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we have
a minor downward trendline defining the pullback into the support. If the price
bounces and moves into the trendline, we can expect the sellers to lean on it
with a defined risk above it to position for a break below the support. The
buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into the 4,510 level next.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here as the buyers will look for a long positions around
the support and on the break of the downward trendline, while the sellers will
wait for a break below the support or a pullback into the trendline to target
new lows. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Todaywe
get the Flash US PMIs, while tomorrow we have the Trump-Xi meeting. The focus
will also remain on US-Iran developments.
This article was written by Giuseppe Dellamotta at investinglive.com.