FUNDAMENTAL
OVERVIEW
Gold spiked to the upside yesterday following the softer than expected
US PCE data but eventually gave back all the gains and extended the losses in
the US session close.
There was no catalyst for the bearish move but frankly speaking, there
wasn’t even one for the bullish one as the PCE data surprised to the downside
mainly due to BEA’s annual methodological update and revisions.
In fact, the BEA changed how some prices are constructed. There was
enough uncertainty around these changes that economists had warned beforehand
that the revisions could materially lower reported core PCE. All in all, it
wasn’t a game changer.
In the short-term, the price action might remain mostly rangebound as
the lower probabilities for an October hike and the ongoing US-Iran negotiations
could limit the downside in gold. Nonetheless, a prolonged stalemate or some negative
news on the geopolitical front could add bearish pressure.
Tomorrow, we have also the US NFP report and while better than expected
data might not move the needle much, a very strong report could trigger another
hawkish repricing and weigh on the precious metal. A surprisingly soft reading,
on the other hand, could give gold a boost in the short-term as traders will
likely scale back some of the aggressive rate hike bets.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see gold(CFD contract) has been
pulling back from Monday’s lows on renewed optimism around a US-Iran deal. 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 can
see the price broke below the counter-trendline yesterday and extended the
losses as more sellers piled in. The price bounced from the 4,140 level which
will now act as minor support. If the price break below the support, we can
expect the sellers to increase the bearish bets to target the 3,885 level next.
The buyers, on the other hand, will likely step in around the support with a
defined risk below it to extend the pullback into the major downward trendline.
The red lines define the average daily range for today.
UPCOMING CATALYSTS
Todaywe
get the US ISM Manufacturing PMI and the latest US Jobless Claims figures. Tomorrow,
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.