FUNDAMENTAL
OVERVIEW
Gold rebounded strongly in the final part of last week after Trump ruled
out strikes on Iran before the November elections and added that they’ve been
having productive discussions. The news triggered a relief rally in gold as Treasury
yields and the US dollar pulled back.
Over the weekend, Iran said that the US’s response to its proposal to
reopen the Strait of Hormuz was insufficient. Tehran had outlined seven
conditions for restoring normal maritime passage within seven days and said
some points remained unresolved. The negotiations to resolve the difference are
still ongoing.
Looking ahead, the focus will be on US-Iran developments and the US CPI
on Wednesday. A hotter than expected core reading could raise the probabilities
for a Fed rate hike in October, putting downward pressure on gold. A soft
report, on the other hand, will likely ease rate hike concerns further and
provide another boost to the precious metal.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold(CFD contract) is trading near
a downward trendline. The sellers will likely step in around the trendline,
with a defined risk above it, 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 pile
in for a rally into the 4,700 level next, with the 4,500 level as the first
target.
GOLD
TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have
a minor upward trendline defining the recent pullback. If the price falls back into
the trendline, we can expect the buyers to lean on it, with a defined risk below
it, to target a break above the downward trendline and extend the rally into
the 4,400 level next. The sellers, on the other hand, will want to see the
price breaking below the downward trendline to pile in for a drop into the
3,885 level.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here as the buyers will be better off waiting for the price
to pull back into the upward trendline or break above the downward one, while
the sellers will look for short opportunities around the downward trendline or
on the break of the upward one. The red lines define the average daily range for today.
UPCOMING CATALYSTS
On
Wednesday we have the US CPI report. On Thursday, we get the US PPI, the US
Retail Sales and the latest US Jobless Claims figures.
This article was written by Giuseppe Dellamotta at investinglive.com.