Gold got stuck in a consolidation around the highs as a mix of geopolitical and macro drivers led to a rangebound price action. Last week, Israel eventually decided to proceed with a limited retaliation against Iran. Iran downplayed the airstrikes, which could be a sign that they do not want to escalate things further. We might finally put that episode behind our backs.
On the macro side, the real yields have risen notably in the past couple of weeks, which is generally a negative driver for the Gold market. That was not the case this time and it’s not yet clear if it’s just because of geopolitical fears or something else. If it was indeed just because of geopolitical fears, we might start to see the price rolling over, so the technical levels and the next data will be crucial to monitor.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold got stuck in a consolidation just beneath the 2400 level. From a risk management perspective, the buyers will have a much better risk to reward setup around the trendline where they will also find the confluence of the 38.2% Fibonacci retracement level and the red 21 moving average. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets and target a bigger drop into the next trendline around the 2100 level.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it led to pullbacks into the minor black trendline where the buyers kept on leaning onto to position for new higher highs. This morning, we got a breakout, so the chances for a drop into the major trendline increased. The sellers will start to pile in with a defined risk above the most recent swing high to position for a fall into the trendline. The buyers, on the other hand, will want to see the price rising back above the minor trendline to position for a rally into a new all-time high.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a strong resistance zone around the 2400 level where the price got rejected from several times last week, except the spike caused by the Israeli retaliation. We can see that we now have a minor downward trendline where we can also find the confluence of the red 21 moving average and the 61.8% Fibonacci retracement level. If we get a pullback from the current levels, we can expect the sellers to lean on the trendline to position for a drop into the major trendline with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into a new all-time high.
Upcoming Events
This week is a bit empty on the data front with just a few notable releases. We begin tomorrow with the US PMIs. On Thursday, we get the US Q1 GDP and the latest US Jobless Claims figures. On Friday, we conclude the week with the US PCE report. Strong data is likely to weigh on Gold, while weak figures should give it a boost.
