FUNDAMENTAL
OVERVIEW
Gold rallied strongly in the final part of last week on expectations of an
imminent US-Iran deal. The catalyst that started the rally was an Axios report
on Thursday saying that US and Iran had reached a 60-day memorandum of
understanding (MoU) and the agreement required final approval from Trump. We
got another impulse higher on Friday after Trump announced on Truth Social the
lift of the US naval blockade and a “final determination” on a
broader agreement to follow shortly in the White House Situation Room.
Gold started to give the gains back after the New York Times reported that
Trump did not reach a decision on any new deal with Iran in the Situation Room
as several important issues remained unresolved and continue to prevent a final
settlement. After that, we got many other reports indicating that an agreement
might not be as close as it seemed last week. Moreover, the US struck again
Iranian military sites and the Iran responded with an attack on a US base in
Kuwait. The ceasefire is still supposedly intact.
Despite the expectations for an imminent deal and the reopening of the
Strait of Hormuz, we still haven’t got anything official. There’s just been
lots of noise. The main risk for gold remains the Federal Reserve.
More and more policymakers are now pushing for dropping the easing bias, so
we can expect that to happen at the upcoming FOMC meeting. Moreover, if nothing
changes on the Strait of Hormuz side before then, we might get a hawkish
surprise as inflation continues to run hot and the US data remains resilient.
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. But if the
Strait remains closed for longer and oil prices stay elevated, the risk of the
Fed being forced to hike anyway increases, and that’s going to keep weighing on
gold.
GOLD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
Gold – daily
On the daily chart, we can
see that gold bounced from the new two-month lows and erased all last week’s
losses. The price is now trading again 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 broke above the downward trendline and extended the rally into
the key resistance zone around the 4,585 level before pulling back. The price
is now retesting the broken trendline. We can expect the buyers to step in
around these levels with a defined risk below the 4,460 level to target a break
above the 4,585 resistance. The sellers, on the other hand, will want to see
the price breaking lower to increase the bearish bets into new monthly lows.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
Gold – 1 hour
On the 1 hour chart, we can
see more clearly the retest of the trendline with the swing low around the
4,488 level acting as support. Again, this is where we can expect the buyers to
step in with a defined risk below the support to position for a rally into new
highs. The sellers, on the other hand, will look for a break lower to increase
the bearish bets into new lows. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we have US ISM
Manufacturing PMI. Tomorrow, we get the US Job Openings data. On Wednesday, we
have the US ADP report and the US ISM Services PMI. On Thursday, we get the
latest US Jobless Claims figures. On Friday, we conclude the week with the US
NFP report.
