FUNDAMENTAL
OVERVIEW
Gold rallied on Friday
following a barrage of positive news on the US-Iran front that seemed to point
to an imminent deal after Iran announced the reopening of the Strait of
Hormuz.
The positive price action reversed
heading into the weekend though after Trump said that the US would keep the
blockade of the Strait of Hormuz in place until a deal with Iran was finalized.
Traders might have hedged into the weekend due the risk of an escalation. This
is exactly what happened as Iran reclosed the Strait in retaliation to the US
blockade.
This resulted in a negative
gap when the markets reopened yesterday, and despite the positive developments
and the expected US-Iran talks tomorrow in Islamabad, the uncertainty keeps
capping the upside in gold.
The price action continues
to be driven by US-Iran headlines, and this is unlikely to change until we get
an official resolution. For now, the downside in gold should remain limited
amid positive expectations and a resolution should trigger a rally towards the
5,000 level. On the other hand, if the ceasefire doesn’t get extended and the
war resumes, gold price are likely to quickly fall back into the 4,000 level.
GOLD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that gold just lacks momentum to extend the rally into the 5,000 level amid
US-Iran uncertainty. If the price gets there, we can expect the sellers to lean
on the downward trendline with a defined risk above it to position for a drop
into the major upward trendline around the 4,100 level. The buyers, on the
other hand, will look for a break higher to increase the bullish bets into the
5,400 level next.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
On the 4 hour chart, we
have a minor upward trendline acting as support. The buyers will likely lean on
the trendline with a defined risk below it to keep pushing into the major
downward trendline. The sellers, on the other hand, will look for a break to extend
the pullback into the 4,550 level next.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here but from a risk management perspective, the buyers
will have a better risk to reward setup around the upward trendline to position
for new highs, while the sellers will need a break to open the door for new
lows. Tomorrow, we should have the US-Iran talks
in Islamabad. On Thursday, we get the latest US Jobless Claims figures and the
US PMIs
