FUNDAMENTAL
OVERVIEW
Gold plunged yesterday
after breaking out of its recent consolidation range. The move gained momentum
following news of an Israeli strike on Iran’s South Pars gas field. In the days
leading up to this, Iran had warned it would respond if its energy infrastructure
were targeted.
The attack marked a clear
escalation for markets and triggered the familiar reaction we’ve seen since the
start of the conflict: gold, stocks, and bonds moved lower, while the US dollar
and oil rallied.
Shortly after, gold faced
another headwind when US PPI data came in much stronger than expected,
prompting a more hawkish repricing of interest rate expectations. Prices fell
to new lows before consolidating ahead of the FOMC decision.
However, the selloff
resumed after the Fed. While policymakers left rates unchanged as expected, Fed
Chair Powell struck a more hawkish tone. He emphasized inflation risks, noted
discussions around two-sided risks to rates, and even acknowledged that the
possibility of the next move being a rate hike did come up.
For now, tighter financial
conditions and the hawkish repricing are weighing on gold. This pressure is
likely to persist unless we see a clear de-escalation in tensions between the US
and Iran.
GOLD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
Gold – daily
On the daily chart, we can
see that gold eventually broke out of the consolidation above the 5,000 level
and it’s now approaching the major trendline around the 4,650 level. This is
where we can expect the buyers to step in with a defined risk below the
trendline to position for a rally into new all-time highs. The sellers, on the
other hand, will look for a break lower to increase the bearish bets into the
4,400 level next.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
Gold – 4 hour
On the 4 hour chart, we can
see that the price has been consolidating around the 5,000 support in the past
couple of days and as soon as the price broke through the recent lows, the
bearish momentum increased as more sellers pile in. If we get a pullback from
the major upward trendline, we can expect the sellers to lean on the downward
trendline with a defined risk above it to position for a drop back into the
major trendline targeting a breakout. The buyers, on the other hand, will look
for a break higher to increase the bullish bets into new highs.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
Gold – 1 hour
On the 1 hour chart, we have
a minor downward trendline defining the bearish momentum on this timeframe. If
we get a pullback, we can expect the sellers to lean on the trendline with a
defined risk above it to keep pushing into new lows, while the buyers will look
for a break higher to increase the bullish bets into the next trendline. The
red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the latest US Jobless Claims figures. The focus remains on the
US-Iran war, so keep an eye on the headlines.
