Fundamental Overview
Gold has been on a sustained rally ever since the last Fed’s decision as real yields fell further due to inflation expectations rising faster than nominal yields.
More recently, real yields pulled back a bit, while gold continued to print new highs. The new driver could be China as last week they started to implement strong easing measures.
The market is now looking forward to better global growth although that could come at the cost of inflation staying above the target for longer or even reaccelerating.
Overall, there hasn’t been any bearish catalyst since the last FOMC decision, so the bullish momentum remained intact. Watch out for the US data this week as strong data could trigger a bigger correction, while weak figures might lead to new highs.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that gold pulled back a bit from the all-time highs. From a risk management perspective, the buyers will have a much better risk to reward setup around the trendline. The sellers, on the other hand, will want to see the price breaking lower to position for a drop into new lows.
Gold Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have another trendline defining the current bullish momentum on this timeframe. If we get a pullback, we can expect the buyers to lean on the trendline to position for new highs. The sellers, on the other hand, will want to see the price breaking lower to position for a drop into the major trendline.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price recently broke below the upward trendline that was defining the bullish momentum on this timeframe and the sellers piled in for a drop into the next trendline.
We have a downward trendline now defining the pullback. The sellers will likely lean on it to position for new lows, while the buyers will look for a break higher to pile in for new highs. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have Fed Chair Powell speaking. Tomorrow, we get the US ISM Manufacturing PMI and the US Job Openings data. On Wednesday, we have the US ADP report. On Thursday, we get the latest US Jobless Claims figures and the US ISM Services PMI. Finally, on Friday, we conclude the week with the US NFP report.