FUNDAMENTAL
OVERVIEW
Gold sold off hard yesterday after Trump on Saturday rejected the Iranian proposal to reopen the Strait of
Hormuz and told reporters that he expected to resume bombing Iran after the
midterms.
Things were
looking very bleak, but we started to get some positive headlines during the American
session pointing to possible US concessions.
According
to Axios, Trump reportedly offered Iran sanctions relief and access to
frozen funds in exchange for progress on nuclear program, but the US President
later denied such reports.
He did confirm
though that the American and Iranian negotiators are engaged in talks through
mediators. Iranian Foreign Minister Araghchi said he expected a formal answer
on Tuesday to Tehran’s proposal to open the Strait of Hormuz.
The focus will therefore remain on US-Iran
headlines today. A breakthrough would be positive for gold in the short-term as
the aggressive rate hike bets will likely get pared back. A negative outcome,
on the other hand, will likely continue to weigh on the precious metal.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see gold(CFD contract) collapsed yesterday
after Trump rejected the Iranian proposal to reopen the Strait of Hormuz over
the weekend. All else being equal, the next natural target should be the 3,885
level where we will also find a major upward trendline. If the price gets
there, we can expect the buyers to step in with a defined risk below the upward
trendline to position for a rally into new record highs. The sellers, on the
other hand, will look for a break to extend the drop into the 3,500 level next.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we
have a 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 keep targeting the 3,885 level. The buyers, on the
other hand, will want to see the price breaking higher to position for a
correction into the 4,500 level next.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we can
see the strong bearish momentum has finally waned and the price action seems to
be pointing to a short-term pullback. We now have a counter-trendline defining
the start of the pullback. The buyers will likely continue to lean on this
trendline, with a defined risk below it, to keep targeting a move into the
downward trendline. 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. The red lines
define the average daily range for today.
UPCOMING CATALYSTS
Today, we get the US
Consumer Confidence report and the US Job Openings data. Tomorrow, we have the
US ADP and the US PCE price index. On Thursday, we get the US ISM Manufacturing
PMI and the latest US Jobless Claims figures. On Friday, we conclude the week
with the US NFP report. The focus, though, will remain mostly on US-Iran developments.
This article was written by Giuseppe Dellamotta at investinglive.com.