Fundamental Overview
Gold had a bad start of the week after the nomination of Scott Bessent for Treasury secretary over the weekend. Bessent is seen as a fiscal hawk, and the market views him as a great pick for the job.
One of the main reasons why the magnitude of the correlation between gold and real yields weakened in the past couple of years was due to the US fiscal profligacy. This has led to much stronger rallies in gold when real yields fell and more contained selloffs when real yields rose.
In the bigger picture, gold remains in a bullish trend as real yields will likely continue to fall amid the Fed’s easing cycle, but the short-term corrections will be triggered by a repricing in rate cuts expectations.
Overall, we might not see the same strong uptrend in gold going forward as we got used to in the past couple of years.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold dropped all the way back to the key support zone around the 2600 level where we have also the major trendline. The price bounced there as the buyers stepped in to position for a rally into a new all-time high. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the next major trendline around the 2400 level.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price is breaking above the minor resistance around the 2643 level. That should give the buyers more conviction to target new highs, so we can expect the bullish momentum to gradually increase. The sellers, on the other hand, will look for a failed break to pile in and target a break below the 2600 support.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor upward trendline defining the current bullish momentum on this timeframe. The buyers will likely keep on leaning on it, while the sellers will look for a break below it to target new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the US PCE report and the latest US Jobless Claims figures.
