Fundamental
Overview
Gold rallied strongly on Friday following a softer than expected NFP report. Overall, the data wasn’t as
bad as one might think by just looking at the reaction but given that we were
positioned for a strong report and the pricing got more hawkish after the Fed’s
decision, the weaker data was enough to trigger a quick repricing.
In fact, the market is now
pricing 59 bps of easing by year-end compared to just 35 bps before the NFP
release. That’s a pretty quick change of heart. The attention will now switch
to the next key data and the Fedspeak as we trade into the next FOMC decision in
September.
It’s highly likely that
more benign data will see Fed Chair Powell opening the door for a cut in
September at the Jackson Hole Symposium. In the bigger picture, gold should remain
in an uptrend as real yields will likely continue to fall amid Fed easing. But
further hawkish repricing in interest rates expectations will likely keep on triggering
corrections in the short term.
Gold
Technical Analysis – Daily Timeframe
Gold Daily
On the daily chart, we can
see that gold bounced before reaching the 3,245 support as the soft US NFP report
triggered a rally. The target for the buyers should be the key 3,438 resistance
where we can expect the sellers to step in to position for a drop back into the
support.
Gold Technical Analysis
– 4 hour Timeframe
Gold 4 hour
On the 4 hour chart, we can
see that we had a downward trendline defining the bearish momentum. The
price broke out to the upside and the buyers piled in more aggressively with
the soft NFP data giving a boost. The price is now trading above the most
recent swing high at 3,334 level that could act as support.
That’s where we can expect
the buyers to step in with a defined risk below the level to keep pushing into
the 3,438 resistance. The sellers, on the other hand, will look for a break
lower to pile in for a drop back into the 3,245 support.
Gold Technical Analysis
– 1 hour Timeframe
Gold 1 hour
On the 1 hour chart, there’s
not much else we can add here as the buyers will look for a bounce around the
3,334 level, while the sellers will target a break lower. If the bullish
momentum remains strong today though, we could see the buyers increase the
bullish bets on a break of the recent high at 3,369. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we have the US ISM Services PMI and
on Thursday, we get the latest US Jobless Claims figures.
