FUNDAMENTAL
OVERVIEW
Gold continues to consolidate around the recent lows as traders await
new developments on the US-Iran negotiations front and remain wary of the US
CPI risk next week.
Yesterday’s weakness was caused by a rise in Treasury yields and the US
dollar after oil prices jumped following Houthi attacks on Saudi Arabia,
including airports, while there were also reports of damage to Saudi energy
infrastructure.
Moreover, a developing storm
is threatening US Gulf production and refining infrastructure. Reuters
estimated that facilities responsible for around 15% of US crude production and
5% of natural-gas production could be affected, while up to six major
refineries could face disruption.
These are not really game-changing news, but they can keep oil prices supported in the short-term. Given the light calendar this week, the price action might remain
rangebound unless we get a breakthrough in US-Iran negotiations or a
re-escalation. In the first case, gold would likely get a boost from easing inflation
and rate hike concerns, while in the second scenario, we could see another
strong selloff.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold(CFD contract) is
consolidating near the lows. If we get a pullback into the major downward trendline,
we can expect the sellers to lean on 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 4,400 level as the first target.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we can
see more clearly the rangebound price action around the lows. If we get another
pullback into the 4,110 low, we can expect the buyers to step back in, with a
defined risk below the low, to keep pushing into the downward trendline. The
sellers, on the other hand, will look for a break lower to increase the bearish
bets into the 3,885 level next.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, we
have a minor resistance zone around the 4,165 level but it proved unreliable after
two consecutive fakeouts yesterday. From a risk management perspective, the buyers
will be better off waiting for a pullback into the recent lows or a break above
the trendline and the 4,240 resistance to position for a rally into the 4,700
level. The sellers, on the other hand, will want to see the price pulling back
into the trendline or break below the lows to target a drop into the 3,885 level
next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Todaywe
have the FOMC meeting minutes. Tomorrow, we get the latest US Jobless Claims
figures. On Friday, we conclude the week with the University of Michigan
Consumer Sentiment survey.
This article was written by Giuseppe Dellamotta at investinglive.com.