Fundamental Overview
The bullish momentum in gold weakened recently as the pressure from the rising real yields started to weigh on the market. We haven’t got any meaningful catalyst in the last week but there’s been a good argument that the markets have been already positioning into a Trump victory.
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 expectations but unless the Fed’s reaction function changes, the uptrend should remain intact.
In fact, the US election will be a huge catalyst for gold as a Trump victory, and more specifically a Republican sweep, will likely raise real yields on higher growth and less rate cuts expectations and trigger a strong selloff.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold managed to rally into a new all-time high last week but couldn’t extend into a new one as the pressure from rising real yields started to build. From a risk management perspective, the buyers will have a better risk to reward setup around the major trendline. The sellers, on the other hand, will want to see the price breaking below the trendline to pile in for a drop into the 2500 level.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently broke below the minor trendline that was defining the bullish momentum on this timeframe. This is generally a signal of weakening momentum. The price consolidated since then with a rangebound price action near the all-time high.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor resistance zone around the 2740 level with the price trading in a rising channel. The buyers will want to see the price breaking above the top trendline to position for a rally into a new all-time high, while the sellers will likely keep on stepping in around these levels to target a pullback into the 2685 level. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the US Job Openings and the US Consumer Confidence report. On Wednesday, we get the US ADP and the US GDP. On Thursday, we have the US PCE, the US Jobless Claims and the US Employment Cost Index data. Finally, on Friday, we conclude the week with the US NFP and the US ISM Manufacturing PMI.
