Fundamental
Overview
Nothing has changed this week in the market. Gold has been stuck in a
consolidation since last Tuesday despite a more hawkish than expected Fed Chair
Powell. It might be a sign of a short-term bottom, but it could also be just
some exhaustion after the 11% drawdown.
There are no strong reasons
for more upside at the moment, so the consolidation could extend for weeks or
even months if we don’t get new catalysts to trigger a sustained move on either
side. Right now, the picture is more neutral to bearish.
Strong US data, especially
on the labour market side, should keep weighing on gold as it would keep the
market speculating on rate cuts pause. Conversely, weak data is likely to
support the precious metal as it would give the Fed more reasons to keep cutting
rates.
In the bigger picture, gold
should remain in an uptrend as real yields will likely continue to fall amid
the Fed’s dovish reaction function. But in the short term, a further hawkish
repricing in interest rate expectations should keep weighing on the market.
Gold
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that gold has been consolidating between the 4000 and 3900 level. There’s
not much we can glean from this timeframe, so we need to zoom in to see some
more details.
Gold Technical Analysis
– 4 hour Timeframe
On the 4 hour chart, we can
see that we have a strong resistance zone around the 4020 level where the price
got rejected from several times in the past days. That’s where we can expect
the sellers to continue to step in with a defined risk above the resistance to
position for a drop into the 3820 level. The buyers, on the other hand, will
want to see the price breaking higher to pile in for a rally back into the 4150
level.
Gold Technical Analysis
– 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here as the sellers will look to short from the
resistance, while the buyers will target a breakout. If we get a pullback from
the resistance, the buyers will likely lean on the minor support zone around
the 3960 level, while the sellers will look for a break lower to increase the
bearish bets into new lows
