Fundamental
Overview
Gold dropped yesterday
following the weak US
consumer confidence report. The main culprit for the weakness in gold was
the selloff in the US stock market as it tightens financial conditions when it’s
aggressive.
The problem here is that we
got weaker economic data with increasing inflation expectations. The market
might be fearing that in case we get a slowdown, the Fed might not be fast
enough in cutting rates amid inflation remaining above target and uncomfortably
high long-term inflation expectations.
This is the growth scare
risk that was highlighted for some downside in gold given the overstretched
long positions. The next NFP and CPI reports will be key for the market. Hot
data, especially on the inflation side, will likely trigger a strong selloff in
gold.
Gold
Technical Analysis – Daily Timeframe
Gold Daily
On the daily chart, we can
see that gold pulled back from the all-time highs following the selloff in the
US stock market. From a risk management perspective, the buyers will have a
better risk to reward setup around the 2790 level, while the sellers will look
for a break below the level to start targeting the 2600 level next.
Gold Technical Analysis
– 4 hour Timeframe
Gold 4 hour
On the 4 hour chart, we can
see that the price bounced around the major upward trendline as the buyers stepped in with
a defined risk below the trendline to position for a rally into new all-time
highs. The sellers, on the other hand, will want to see the price breaking
lower to increase the bearish bets into the 2790 level next.
Gold Technical Analysis
– 1 hour Timeframe
Gold 1 hour
On the 1 hour chart, we can
see that we have a resistance zone around the 2925 level. If the price gets
there, we can expect the sellers to step in with a defined risk above the
resistance to target a break below the major trendline. The buyers, on the other
hand, will look for a break higher to increase the bullish bets into new
all-time highs. The red lines define the average daily range for today
Upcoming
Catalysts
Tomorrow we get the latest US Jobless Claims figures, while on
Friday we conclude the week with the US PCE data.