FUNDAMENTAL
OVERVIEW
Gold rebounded in the final part of last week on hopes that Iran would accept
the US war-ending proposal after Axios reported the two parties were getting
close to a one-page memo and that US officials were expecting Iran’s response
to several key points in the following 48 hours. That was preceded by Trump
pausing Project Freedom which was interpreted as another step towards a deal.
Unfortunately, both Trump
and Iran rejected the respective proposals calling them unacceptable and
leaving the two sides miles apart on any potential agreement. Moreover, Israeli
PM Netanyahu confirmed that the removal of Iranian nuclear material remains an
active war priority, and separate reports indicated that Trump told Netanyahu
directly he wants to go in on Iranian nuclear sites.
This kind of headline noise has been going on for several weeks and kept
the markets in rangebound mode as traders continued to wait for new
developments before picking a direction. The unlimited ceasefire is acting as a
floor, while the tensions and lack of breakthrough as a ceiling.
In the short-term, a resolution and the reopening of the Strait will likely
support gold on falling oil prices and increased rate cut bets as inflation
worries would ease. On the other hand, if the war restarts, we can expect gold
prices to quickly fall back to March lows.
GOLD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
Gold – daily
On the daily chart, we can
see that gold rebounded in the final part of last week on hopes that Iran would
accept the US war-ending proposal. Unfortunately, that hasn’t happened and we got
a little pullback. The price is still trading right in the middle of the two
key trendlines, so there’s not much we can glean from this timeframe. We need
to zoom in to see some more details.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
Gold – 4 hour
On the 4 hour chart, we can
see the price is bouncing on the key 4,650 support zone. This is where we can
expect the buyers to step in with a defined risk below the support to position
for a rally back into the 4,890 level. The sellers, on the other hand, will
look for a break lower to pile in for a drop into the 4,350 level next.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
Gold – 1 hour
On the 1 hour chart, the
recent price action might have formed a bullish flag, but we will need a break
above the top trendline to confirm it. For now, the buyers will likely continue
to pile in around the support and target a breakout to the upside, while the
sellers will wait for a break below the support or a rejection around the top
trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow we get the US CPI report. On Wednesday, we have the US PPI data. On
Thursday, we get the US Retail Sales report and the latest US Jobless Claims
figures.
