FUNDAMENTAL
OVERVIEW
Gold has been pulling back from the Monday’s lows as renewed optimism
around US-Iran talks helped ease the tensions. Both sides are still engaged in
negotiations to amend Iran’s recent proposal to reopen the Strait of Hormuz
within seven days under certain conditions. The disagreement now reportedly centres
on the sequencing of the steps rather than the components of the plan.
Moreover, Fed’s
Williams yesterday gave gold a boost after he said that he didn’t see any
urgency after the September hike and that one further hike was likely if the
economy performed as expected. His comments triggered a dovish repricing and
the odds for a rate hike in October fell from 70% to 45%.
Looking ahead, the focus will remain on US-Iran developments.
A breakthrough would be positive for gold in the short-term as the aggressive
rate hike bets will likely get pared back further. A negative outcome or a
prolonged stalemate, on the other hand, will likely continue to keep a lid on
the precious metal (unless the Fed keeps being more dovish than market’s expectations).
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see gold(CFD contract) has finally
started to pull back after the Monday’s selloff. The natural target for the
sellers 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 have
the upward counter-trendline defining the current pullback. The buyers will
likely continue to lean on the trendline, with a defined risk below it, to keep
pushing into the 4-hour 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
Todaywe
have the US ADP and the US PCE price index. Tomorrow, 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 on
US-Iran developments.
This article was written by Giuseppe Dellamotta at investinglive.com.