Fundamental Overview
There hasn’t been any catalyst this week for the rally in gold although we had a key technical breakout which might have increased the bullish momentum.
The lack of bearish catalysts though is helping to keep the bid going as the market has finished to reprice the aggressive rate cuts expectations that weighed on gold in the past weeks as it contributed to lift real yields.
In fact, in the bigger picture, gold remains in a bullish trend as real yields will likely continue to fall amid the Fed’s easing cycle. The pullbacks will likely be triggered by a repricing in rate cuts but unless the Fed’s reaction function changes, the uptrend should remain intact.
One key event which could trigger a strong selloff in gold is the upcoming US election. In fact, a Trump victory will likely raise real yields on higher growth and less rate cuts expectations. So, definitely mark that on the calendar.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold bounced near the key trendline and it’s now approaching the all-time high around the 2685 level. The buyers will want to see the price breaking higher to increase the bullish bets into new highs, while the sellers will likely step in around the all-time high to position for a pullback into the trendline.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we had some choppy price action around the counter-trendline but eventually the buyers prevailed. We now have another minor upward trendline defining the current bullish momentum. If we were to get a pullback, the buyers will likely lean on it to position for new highs, while the sellers will look for a break lower to target a drop into the major trendline.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another minor upward trendline defining the bullish momentum on this timeframe. The buyers will keep on leaning on the trendline for more upside, while the sellers will look for a break lower to target new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the US Retail Sales and US Jobless Claims data.