Fundamental
Overview
Gold continues to correct
lower as the market unwinds some of the stagflationary risk that was priced in
in the past months. The de-escalation trend will likely remain intact until the
first trade deal.
The stagflationary pricing is
what got gold to such high prices, and as we start to price out that risk, it’s
normal to see a correction, especially considering that “long gold” has been
the most crowded trade.
In the bigger picture, gold
remains in an uptrend as real yields will likely continue to fall amid Fed
easing. But in the short-term more positive news on the tariffs front should see
more downside for gold as the market readjusts to new conditions.
Gold
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that gold broke out of the recent range to the downside as the market
continues to reprice the stagflationary risks. From a risk management
perspective, the buyers will have a better risk to reward setup around the previous
high at 3167 to position for further upside, while the sellers will look for a
break lower to increase the bearish bets into the major trendline around the
3100 level.
Gold Technical Analysis
– 4 hour Timeframe
On the 4 hour chart, we can
see more clearly the breakout of the range between the 3258 support and the
3367 resistance. We now have a downward trendline defining the bearish
momentum. The sellers will likely step in around the broken support and the
trendline to position for further downside, while the buyers will want to see
the price breaking higher to target the 3367 level next.
Gold Technical Analysis
– 1 hour Timeframe
On the 1 hour chart,
there’s not much else we can add here as the sellers will likely step in both
at the broken support and the trendline, while the buyers will pile in at every
break higher. Tomorrow, we conclude the week with
the US NFP report
