Fundamental
Overview
Last Thursday, gold got hit
by some strong selling pressure following the US
Jobless Claims and the US
Core PCE report. The data keeps on showing that the US economy is doing
pretty good, and we even saw some acceleration in activity in other data
points.
The data and the proximity
to the US election might have triggered some de-risking. 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 expectations but unless the Fed’s reaction function
changes, the uptrend should remain intact.
Tomorrow, we have the US Presidential
Election and that could be a huge catalyst for gold. In fact, a Trump victory,
and more specifically a Republican sweep, will likely raise real yields on
higher growth and less rate cuts expectations and trigger a strong selloff.
Gold
Technical Analysis – Daily Timeframe
Gold Daily
On the daily chart, we can
see that gold dropped from the all-time high as the market is probably
de-risking before the US Presidential Election. From a risk management
perspective, the buyers will have a better risk to reward setup around the major
trendline. The sellers, on the other hand, will
want to see the price breaking lower to start targeting new lows.
Gold Technical Analysis
– 4 hour Timeframe
Gold 4 hour
On the 4 hour chart, we can
see that the price broke below the minor upward trendline that was defining the bullish momentum
on this timeframe. This could be a signal of a bigger pullback as the price
retested the previous support
now turned resistance and fell back to the recent lows.
The sellers will likely
target the major upward trendline now, while the buyers will want to see the price
rising back above the 2760 level to pile back in for a rally into a new
all-time high.
Gold Technical Analysis
– 1 hour Timeframe
Gold 1 hour
On the 1 hour chart, we can
see that we now have a support around the 2730 level. The sellers will want to
see the price breaking lower to increase the bearish bets into the major
trendline, while the buyers will likely lean on the level to position for the
break above the 2760 level. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we have the US ISM Services PMI and the US Presidential Election. On Thursday,
we have the US Jobless Claims and the FOMC Policy Decision. On Friday, we conclude
the week with the University of Michigan Consumer Sentiment report.