Fundamental
Overview
Gold showed impressive
resilience yesterday despite major headwinds coming from strong US data, higher
yields and surging US dollar. On a day like that, you would expect gold to make
a decent pullback, but that wasn’t the case at all.
Nevertheless, the upside
looks limited at the moment because of the hawkish repricing in interest rates
expectations that we are undergoing. And it might not be over at all as the
market is still pricing 39 bps of easing by year-end and 100 bps cumulatively
by the end of 2026 compared to 75 bps projected by the Fed.
In the bigger picture, gold
should remain in an uptrend as real yields will likely continue to fall amid
the Fed’s dovish reaction function. In the short-term though, hawkish repricing
in interest rates expectations caused by strong US data will likely keep on triggering
corrections.
Next week, we have major
data releases with ISM PMIs and lots of US labour market data which is what the
Fed is most focused on right now. The ADP and NFP will be the main events.
Gold
Technical Analysis – Daily Timeframe
Gold daily
On the daily chart, we can
see that gold went into some consolidation this week as headwinds like higher yields
and US dollar weighed on the market. From a risk management perspective, the
buyers will have a better risk to reward setup around the major trendline, while the sellers will look for a
break lower to extend the drop into the 3,120 level next. Such a big correction
though, will likely need strong US data to trigger a hawkish repricing in
interest rates expectations.
Gold Technical Analysis
– 4 hour Timeframe
Gold 4 hour
On the 4 hour chart, we can
see that we have another minor upward trendline defining the bullish momentum
on this timeframe. If we get a pullback into the trendline, we can expect the
buyers to lean on it with a defined risk below it to position for a rally into
a new all-time high. The sellers, on the other hand, will want to see the price
breaking lower to pile in for a drop into the 3,627 level next.
Gold Technical Analysis
– 1 hour Timeframe
Gold 1 hour
On the 1 hour chart, we can
see that we have a bit of a consolidation around the highs. The minor downward trendline
is defining the pullback. The sellers will likely continue to lean on the
trendline to keep pushing into new lows, while the buyers will want to see the
price breaking higher and above the 3,761 level to pile in for a rally into a
new all-time high. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the US PCE and the final
University of Michigan consumer sentiment report.
