Fundamental
Overview
Gold continued to edge
higher this week following Powell’s dovish tilt last Friday. Inflation
expectations kept on climbing, while Treasury yields have not gone anywhere.
That caused real yields to fall giving further support to gold prices.
The focus is now on the US
labour market data that will culminate with the NFP report next Friday. Strong
data might take the probability for a September cut towards a 50/50 chance but
will certainly see a more hawkish repricing further down the curve and weigh on
gold.
Soft data, on the other
hand, will likely see traders increasing the dovish bets with a third cut by
year-end being priced in and giving gold another boost.
In the bigger picture, gold
should remain in an uptrend as real yields will likely continue to fall amid
Fed easing given their dovish reaction function. In the short-term though, hawkish
repricing in interest rates expectations will likely keep on triggering corrections.
Gold
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that gold has been slowly climbing towards the key 3,438 resistance. If the price gets there, we can
expect the sellers to step in with a defined risk above the resistance to
position for a drop back into the 3,245 support. The buyers, on the other hand,
will want to see the price breaking higher to extend the rally into the 3,500
level next.
Gold Technical Analysis
– 4 hour Timeframe
On the 4 hour chart, we can
see that we have a minor upward trendline
defining the bullish momentum on this timeframe. The buyers will likely
continue to lean on the trendline with a defined risk below it to keep pushing
into new highs, while the sellers will look for a break lower to target a
pullback into the 3,350 level next.
Gold Technical Analysis
– 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here as the buyers will continue to pile in around
these levels, while the sellers will look for a break below the trendline to position
for a drop into the 3,350 level. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the latest US Jobless Claims
figures, while tomorrow we conclude the week with the US PCE price index.
This article was written by Giuseppe Dellamotta at investinglive.com.