FUNDAMENTAL
OVERVIEW
Gold extended the gains after the market faded the hawkish overreaction
to the FOMC decision. The most important thing was the projection of just one
more rate hike. In my opinion, this reflects a low appetite for tightening.
Looking ahead, I would carefully watch
the situation in the Middle East as $100 oil, rate hikes and elevated bond
yields might put more pressure on Trump to end the war. We might be already
entering a de-escalation phase as Trump called a meeting with Gulf leaders on
Tuesday on the sidelines of the UN General Assembly in New York to discuss the
next steps in the war with Iran. Notably, the Iranian delegation will be
allowed to participate.
A de-escalation would send oil prices lower, easing inflation and rate
hikes concerns, ultimately supporting gold.
Economic data will be another key driver. When positioning and market
expectations become stretched, even a modest shift in the data can trigger a
significant reversal. If the US data starts surprising to the downside,
expectations for aggressive rate hikes will likely be reduced, giving gold an
additional boost.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see gold (XAU/USD CFD contract) rebounded strongly from the
key 4,300 support, with buyers targeting the swing high around the 4,510 level.
If the price gets there, we can expect the sellers to step in with a defined risk
above the swing high to position for a drop back into the 4,300 support. The
buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into the 4,700 level next.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, the
price is breaking above the downward trendline. We can expect the buyers to
pile in around these levels with a defined risk below the most recent swing low
at 4,334 to keep pushing into the 4,510 level. The sellers, on the other hand,
will need the price to break below the 4,300 support to gain more conviction
for further downside.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we
have a minor upward trendline defining the bullish momentum. If we get a pullback,
the buyers will likely lean on the trendline with a defined risk below the
4,334 swing low to position for a rally into the 4,510 level. The sellers, on
the other hand, will look for a break lower to start positioning for a move
into the support, targeting new lows. The red lines define the average daily range for today.
UPCOMING CATALYSTS
On
Tuesday, we have the Trump meeting with Gulf leaders and on Wednesday we get
the Flash US PMIs.
This article was written by Giuseppe Dellamotta at investinglive.com.