FUNDAMENTAL
OVERVIEW
Gold spiked to the
downside on Friday after the US NFP report showed job growth in August almost tripling the
consensus estimate of 56K. The losses didn’t last long, though, as most of the
NFP-driven moves got faded thereafter.
This happened
because the market focus was not on the NFP report, but on the CPI. The market
pays attention to the data that the central bank is focused on, and the Federal
Reserve is currently focused on inflation.
In fact, just a
day before the NFP report, Fed’s Waller mentioned that he would support keeping
interest rates unchanged at the upcoming FOMC meeting, but a hot CPI would make
him consider a rate hike.
This week is all about the US CPI data. Unless,
we get some surprising breakthrough in US-Iran relations, the price action will
likely remain mostly rangebound or a bit negative for gold as traders at some
point might start hedging into the CPI release.
A soft or in-line CPI will likely give
gold a boost as Fed’s Waller mentioned that he won’t consider a rate hike unless we get a hot CPI. Conversely, an upside surprise in core monthly inflation
data will likely trigger another selloff in gold on a hawkish repricing.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we have
a support zone around the 4,311 level. If the price pulls back into the support
again, we can expect the buyers to step in with a defined risk below the support
to position for a rally into the 4,890 level. 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.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we
have a downward trendline defining the recent bearish structure. If we get a
pullback into the trendline, we can expect the sellers to lean on it with a
defined risk above it to keep pushing into new lows. The buyers, on the other
hand, will look for a break higher to increase the bullish bets into the 4,890
level next.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we have
a minor resistance zone around the 4,450 level. If the price gets there, we can
expect the sellers to step in with a defined risk above the resistance to keep
pushing into new lows. The buyers, on the other hand, will look for a break to
extend the pullback into the trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
On Thursday, we get the
US PPI report and the US Jobless Claims figures. On Friday, we conclude the
week with the US CPI report.
This article was written by Giuseppe Dellamotta at investinglive.com.