Fundamental
Overview
Gold extended the rally
into yet another all-time high today as the lack of bearish catalysts keeps the
bullish momentum going. The market is just moving by inertia, and given the US
government shutdown, there’s not much stopping this train. Even the US CPI
report could be delayed if the shutdown stretches into next week.
In the bigger picture, gold
should remain in an uptrend as real yields will likely continue to fall amid
the Fed’s dovish reaction function. In the short-term though, a hawkish repricing
in interest rates expectations caused by strong US labour market data will
likely trigger a correction.
Gold
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that gold extended the rally into yet another all-time high today as the
lack of bearish catalysts keeps the bullish momentum intact. From a risk
management perspective, the buyers will have a better risk to reward setup around
the major trendline, while the sellers will look for a
break lower to extend the drop into the 3,120 level next. Such a big correction
though, will need strong US labour market data to trigger a hawkish repricing
in interest rates expectations.
Gold Technical Analysis
– 4 hour Timeframe
On the 4 hour chart, we can
see that we have another upward trendline defining the bullish momentum on this
timeframe. If we 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 a new
all-time high. The sellers, on the other hand, will want to see the price
breaking lower to pile in for a drop into the 3,718 level next.
Gold Technical Analysis
– 1 hour Timeframe
On the 1 hour chart, we can
see that we have a minor support zone around the 3,895 level.
If we get a pullback, we can expect the buyers to step in around the support
with a defined risk below it to keep pushing into new highs. The sellers, on
the other hand, will look for a break lower to extend the pullback into the trendline
next. The red lines define the average daily range for today.
Upcoming
Catalysts
On Thursday, we have Fed Chair Powell speaking and the US Jobless Claims
(if the shutdown is lifted). On Friday, we conclude the week with the
University of Michigan Consumer Sentiment report.
This article was written by Giuseppe Dellamotta at investinglive.com.