Fundamental
Overview
Gold’s rally stalled this
week as the market participants shave been waiting for the US reciprocal
tariffs plan announcement due today at 4 pm ET. The precious metal has been on
a steady uptrend lately as traders have been finding shelter amid
stagflationary risks.
Today’s event will trigger
huge moves across the board. Better than expected news will likely weigh on
gold in the short term as the stagflationary fears should ease. On the other
hand, a worse than expected outcome should give gold another boost.
In the bigger picture, as
long as the Fed doesn’t change its reaction function and doesn’t consider rate
hikes, the trend should remain to the upside as real yields will continue to
fall amid the stagflationary pricing.
Gold
Technical Analysis – Daily Timeframe
Gold Daily
On the daily chart, we can
see that gold’s rally stalled this week as traders have been awaiting the US reciprocal
tariffs plan announcement due today. From a risk management perspective, the
buyers will have a better risk to reward setup around the major trendline to position for further upside,
while the sellers will want to see the price breaking below the trendline to
start targeting a deeper correction into the 2832 level.
Gold Technical Analysis
– 4 hour Timeframe
Gold 4 hour
On the 4 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum on this
timeframe. If we were to 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
new highs. The sellers, on the other hand, will want to see the price breaking
lower to pile in for a drop into the next major trendline.
Gold Technical Analysis
– 1 hour Timeframe
Gold 1 hour
On the 1 hour chart, we can
see that the price broke below the minor trendline that was defining the
bullish momentum on this timeframe. This could indicate that a pullback might
be in the cards although the technicals will likely be useless today given the
announcement.
We have a minor support
around the 3100 level where the buyers will likely lean onto to position for a
rally into new highs, while the sellers will look for a break lower to extend
the pullback into the next trendline.
The red lines define the average daily range but they will be unreliable today
as the market reaction after the tariffs announcement will likely be bigger
than any day in the past few weeks.
Upcoming
Catalysts
Today we have the US ADP and the unveiling
of the US reciprocal tariffs plan. Tomorrow, we get the US ISM Services PMI and
the latest US Jobless Claims figures. On Friday, we conclude the week with the
US NFP report and Fed Chair Powell speech.