FUNDAMENTAL
OVERVIEW
Gold came back under pressure after Trump poured some cold water on expectations of an earlier
end to the Iran war after he repeated that the US would make a deal with Tehran
after the November elections. Oil prices, Treasury yields and the US dollar rose
started to rise again after his remarks and weighed on gold.
The losses then
extended on Wednesday after the US PMIs came out much stronger than expected, increasing
Fed rate hike bets and sending real yields higher.
The markets are currently focused on renewed
hopes for a deal and the reopening of the Strait of Hormuz following
yesterday’s news that Iran has put an offer on the table, promising to reopen
the Strait of Hormuz within seven days if the US meets its terms. Iran’s
Foreign Minister Araghchi is staying in New York over the weekend to await a US
response.
A breakthrough would be positive for gold as the
aggressive rate hike bets will likely get pared back and lead to a fall in real
yields. A prolonged stalemate or even a re-escalation, on the other hand, will
likely continue to put pressure on the precious metal on tightening financial
conditions.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see gold(CFD contract) is currently
trading below the key support zone around the 4,300 level. We can expect the sellers
to continue to step in around these levels with a defined risk above the zone
to keep targeting the 3,885 level. The buyers, on the other hand, will want to
see the price rising back above the support zone to position for a rally into the
4,700 level, with the 4,510 level as the first target.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we
have a minor downward trendline defining the bearish structure. If the price pulls
back 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 and new lows.
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 sellers will continue to look for short
opportunities around the broken support or the downward trendline, while the
buyers will want to see upside breaks to start targeting new highs. The red
lines define the average daily range for today.
UPCOMING CATALYSTS
Today we don’t have anything
on the agenda, but traders will keep a close eye on US-Iran developments after
yesterday’s proposal of reopening the Strait of Hormuz under certain
conditions.
This article was written by Giuseppe Dellamotta at investinglive.com.