Fundamental Overview
Gold has been on a steady retreat since hitting a new all-time high last Wednesday. We saw a reversal in many other markets since last Wednesday and it’s not clear what has been behind the move. The data continues to point to a resilient economy with inflation falling slowly back to target. That should see the Fed cutting rates at least two times this year.
On the other hand, the risks to the growth picture increase the longer the Fed keeps policy restrictive. The new driver could be Trump now looking more and more like a potential winner and his policies are seen as inflationary which could see the Fed eventually going even more slowly on rate cuts.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold fell back below the 2430 level last week and extended the drop as the sellers started to pile in more aggressively. The natural target should be the key 2277 support. The buyers will look for dip-buying opportunities on the lower timeframes but a move back above the 2430 resistance would give them more conviction on further upside.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke through the trendline recently and switched the bias more bearish in the short-term. We are now seeing some consolidation at the 2387 level.
This is where we can expect the buyers to step in with a defined risk below the level to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 2348 level next.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the current price action. The buyers will want to see the price breaking above the most recent lower high at 2412 to regain some control and increase the bullish bets into new highs targeting a break above the 2430 resistance.
The sellers, on the other hand, might want to wait for the price to get back to the 2430 resistance to step back in with a better risk to reward setup or increase the bearish bets on a break below the 2387 level. The red lines define the average daily range for today.
Upcoming Catalysts
This week is pretty empty on the data front. We begin tomorrow with the release of the US Flash PMIs. On Thursday, we will get the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the US PCE report.
