FUNDAMENTAL
OVERVIEW
Gold has been supported since the FOMC decision as the market has faded
the hawkish overreaction. In fact, the Fed projected a less hawkish
path for interest rates than the market was pricing and Fed Chair Warsh
mostly repeated the points from his Jackson Hole speech.
Moreover, the recent fall in oil prices amid expectations of a potential
de-escalation has helped ease inflation and rate hike concerns somewhat.
The market’s focus is now on tomorrow’s UN General Assembly, as Trump
called a meeting with Gulf leaders on the sidelines to discuss the next steps
in the war with Iran. The Iranian delegation was also allowed to participate in
the Assembly, so there will likely be a meeting between Trump and Iranian
President Pezeshkian.
Keep in mind that a de-escalation would send oil prices lower, further
easing inflation and rate hike concerns and ultimately supporting gold.
Economic data will also be important given the current market’s pricing.
When positioning and market expectations become stretched, even a modest shift
in the data can trigger a significant reversal. If US data starts surprising to
the downside, expectations for aggressive rate hikes will likely be reduced,
giving gold an additional boost.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see goldrebounded strongly from the
key 4,300 support but got rejected around the 4,400 level. If the price pulls all
the way back to the support, we can expect the buyers to step in there with a
defined risk below the support to position for a rally into the 4,510 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 can
see the price is breaking above the downward trendline that was defining the
bearish structure. We can expect the buyers to pile in around these levels with
a defined risk below the most recent swing low at 4,334 to keep pushing into
the 4,510 level. The sellers, on the other hand, will need the price to break
below the 4,334 level to start targeting a break below the major 4,300 support.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we
have a minor downward trendline defining the bearish momentum. If we get a
pullback, the sellers will likely lean on the trendline 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 4,510 level next.
The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow, we have Trump meeting
with Gulf leaders and potentially with Iran’s President at the UN General
Assembly. On Wednesday, we get the Flash US PMIs. On Thursday, we have the
Trump-Xi meeting.
This article was written by Giuseppe Dellamotta at investinglive.com.