FUNDAMENTAL
OVERVIEW
Gold erased its weekly losses after Trump said on Truth Social yesterday
that the US was having productive discussions with Tehran and would not attack
Iran before the midterm elections.
Markets reacted immediately, unwinding the escalation premium that had
accumulated following earlier reports that Trump was weighing military strikes
against Iran ahead of the midterms. Oil prices, real yields and the US dollar
all fell after Trump’s post, triggering a rally in gold.
Looking ahead, Iranian Foreign Minister Araghchi said yesterday that
Tehran was reviewing Washington’s response to Iran’s proposal and expected to
reply within the next few days. A positive outcome could shift the outlook for
gold from neutral to bullish, as easing geopolitical tensions would likely put
further downward pressure on oil prices, inflation expectations and rate hike
concerns. A negative response, however, wouldn’t change much but it could limit
gold’s upside.
Next week, the focus will also turn to the US CPI report. A hotter than expected
reading could trigger a hawkish repricing of Fed rate expectations, putting
renewed pressure on gold. Conversely, a soft report would likely ease rate hike
concerns and provide another boost to the precious metal.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold(CFD contract) rallied into
the downward trendline and probed above it after Trump dismissed the intention
of attacking Iran before the midterms. The sellers will likely step in around these
levels with a defined risk above the trendline, to position for a drop into the
3,885 level. The buyers, on the other hand, will continue to pile in above the trendline,
with a defined risk below it, to keep targeting the 4,700 level next.
GOLD
TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see the price is trading above the trendline at the moment, but we still have a
strong resistance around the 4,228 level. The sellers will likely continue to
step in around these levels, with a defined risk above the resistance, 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 increase the bullish bets into the 4,700 level
next, with the 4,400 level as the first target.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we now
have an upward trendline defining the current bullish momentum. If we get a pullback,
we can expect the buyers to lean on the trendline, with a defined risk below it,
to keep pushing into new highs. The sellers, on the other hand, will look for a
break lower to increase the bearish bets into new lows. The red lines define
the average daily range for today.
UPCOMING CATALYSTS
Today we conclude the week
with the University of Michigan Consumer Sentiment survey.
This article was written by Giuseppe Dellamotta at investinglive.com.