Fundamental
Overview
In recent days, gold has
been making new highs despite the lack of bullish catalysts and the rise in
real yields. Nonetheless, we’ve been seeing some quick selloffs at the highs in
a potential sign that real yields are starting to bite, and we might be near a bigger
pullback. Today, we get the Flash US PMIs and if the data is strong, we might
finally see a decent correction lower.
In the bigger picture, gold
remains in a bullish trend as real yields will likely continue to fall amid the
Fed’s easing cycle. The pullbacks will likely be triggered by a repricing in
rate cuts but unless the Fed’s reaction function changes, the uptrend should
remain intact.
One key event which could
trigger a strong selloff in gold is the upcoming US election. In fact, a Trump
victory will likely raise real yields on higher growth and less rate cuts
expectations.
Gold
Technical Analysis – Daily Timeframe
Gold Daily
On the daily chart, we can
see that gold managed to rally into a new high this week but eventually gave
back everything as the pressure from rising real yields started to build. From
a risk management perspective, the buyers will have a better risk to reward
setup around the major trendline, while the sellers will want to see
the price breaking below the trendline to pile in for a drop into the 2500
level.
Gold Technical Analysis
– 4 hour Timeframe
Gold 4 hour
On the 4 hour chart, we can
see that the price broke below the minor trendline
that was defining the bullish momentum on this timeframe. This might be a
signal for a pullback. The sellers will likely step in around these levels to
position for a drop into the 2685 level, while the buyers will want to see the
price rising back above the trendline to target new highs.
Gold Technical Analysis
– 1 hour Timeframe
Gold 1 hour
On the 1 hour chart, we can
see that we have a minor resistance
zone now around the 2740 level where the price is retesting the broken
trendline. This is where we can expect the sellers to pile in with a defined
risk above the resistance to position for a drop into the 2685 level, while the
buyers will want to see the price breaking higher to target new highs. The red
lines define the average daily range for today.
Upcoming
Catalysts
Today we have the US Jobless Claims and the US Flash PMIs.
