FUNDAMENTAL
OVERVIEW
Gold briefly probed below last week’s low yesterday but eventually erased
the losses as oil prices and Treasury yields pulled back.
The US-Iran developments and Fed interest rates repricing have been the
main drivers for a long time. The Middle East situation is now relatively calm
as there’s been a de-escalation since the UN General Assembly, although the
usual strikes on vessels in the Strait of Hormuz persist as Iran tries to
defend its blockade.
On the monetary policy side, Fed’s Williams and Fed’s Jefferson pushed
back against the October rate hike expectations and the softer than expected US
NFP report on Friday reduced the hike probabilities to just 21%.
The dovish repricing helped gold as real yields rebounded but the ongoing
US-Iran negotiations and the US CPI risk next week, could still cap the upside
in the short-term. A soft CPI will likely give gold another boost on a dovish
repricing, but a hot one without an improvement in the Middle East could send
it to new lows.
Given the light calendar this week, the focus will likely be on US-Iran
developments, so the price action could remain mostly rangebound.
If we get a breakthrough in US-Iran negotiations, then we can expect oil
prices to drop significantly and give gold a boost on lower rate hike
expectations. Another escalation, on the other hand, will likely send crude oil
higher and weigh on the precious metal.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold(CFD contract) is
consolidating near the lows. We might get a pullback into the trendline again.
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 want to see the price breaking higher to pile in for a rally into the
4,700 level next, with the 4,400 level as the first target.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we can
see that the price bounced from last week’s low. If we get another pullback
into the 4,110 low, we can expect the buyers to step back in, with a defined
risk below the low, to keep pushing into the downward trendline. The sellers,
on the other hand, will look for a break lower to increase the bearish bets
into the 3,885 level next.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we
have a minor resistance zone around the 4,165 level. If the price gets there,
we can expect the sellers to step in with a defined risk above it to position
for a drop into new lows. The buyers, on the other hand, will look for a break
higher to target a pullback into the trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrowwe
have the FOMC meeting minutes. On Thursday, we get the latest US Jobless Claims
figures. On Friday, we conclude the week with the University of Michigan
Consumer Sentiment survey.
This article was written by Giuseppe Dellamotta at investinglive.com.