FUNDAMENTAL OVERVIEW
Gold extended the losses further as the prolonged US-Iran stalemate and rising tensions in the Strait of Hormuz pushed real yields and the US dollar higher.
The precious metal lacks all the bullish drivers that supported it at the start of the year. The threat to Fed independence was never really an issue, but it was a narrative pushing gold prices higher. That is now gone for good with Fed’s Powell remaining on the board until 2028.
Moreover, the Fed is slowly turning more hawkish, and we are not far away from the central bank dropping completely the easing bias.
In the short-term, the price action will continue to be driven mainly by US-Iran headlines, with a resolution likely triggering a relief rally. But after that, the focus will quickly turn back to the Fed and the economic data.
Even though the end of the war will likely bring energy prices significantly lower, the increase in economic activity could keep inflation higher for longer and eventually even require rate hikes to bring it sustainably back to the 2% target that the Fed has been missing since 2021.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that gold extended the losses further. The price is trading right in the middle of the two key trendlines, so there’s not much we can glean from this timeframe. We need to zoom in to see some more details.
GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have a resistance zone around the 4,650 level. From a risk management perspective, the sellers will have a better risk to reward setup around the resistance with a defined risk above it to position for a drop into the 4,350 level next. The buyers, on the other hand, will look for a break to pile in for a rally into the 5,000 level.
GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have a minor upward trendline defining the current pullback. The buyers will likely continue to lean on the trendline to keep pushing into the resistance, while the sellers will look for a break lower to pile in for a drop into the 4,350 level next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the US ISM Services PMI and the US Job Openings data. Tomorrow, we have the US ADP report. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP report and University of Michigan Consumer Sentiment survey.
