FUNDAMENTAL
OVERVIEW
Gold has been consolidating
since Thursday’s selloff when Trump disappointed the market in his address to
the nation by maintaining the hawkish stance towards Iran and reiterating the 2–3
week timeline for ending the war.
We haven’t got any
meaningful development in the meantime, although Trump set a “final” deadline
for Iran to reopen the Strait of Hormuz which expires today at 8 pm ET. He
threatened to demolish and take Iran out in “one night” if no deal is reached
before the deadline.
This has been keeping the
markets on the defensive and led to rangebound price action pretty much across
the board. Looking ahead, gold’s fate depends on the US-Iran war because of its
link with financial conditions.
For now, the bearish bias
remains intact, and we could see gold falling into the 4,000 level if the
conflict drags on. An escalation will likely put much more downward pressure on
prices, while a de-escalation should trigger another relief rally and take us
towards the 5,000 handle.
GOLD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
Gold – daily
On the daily chart, we can
see that gold is consolidating around the downward trendline. This is where the
sellers are stepping in with a defined risk above the trendline to position for
a drop into the major trendline around the 4,000 level. The buyers, on the
other hand, will look for a break to pile in for a rally into the 5,000 level
next.
GOLD TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME
Gold – 4 hour
On the 4 hour chart, we can
see the price broke below the upward trendline that was defining the pullback
into the major downward trendline. The sellers will likely continue to pile in
around these levels with a defined risk above the downward trendline, while the
buyers will look for a break higher to open the door for new highs.
GOLD TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME
Gold – 1 hour
On the 1 hour chart, we can
see more clearly the rangebound price action around the downward trendline.
This pullback might be forming a triple top or a head and shoulders pattern
with the neckline around the 4,620 level. If we get a break lower, we can
expect the sellers to increase the bearish bets into new lows. The red lines
define the average daily range for today.
UPCOMING CATALYSTS
On Wednesday we have the FOMC minutes. On Thursday, we get the US
PCE price index and the latest US Jobless Claims figures. On Friday, we
conclude the week with the US CPI report and the University of Michigan
Consumer Sentiment survey. It goes without saying that the focus remains on the
US-Iran headlines, so keep an eye out for any new development.
