Fundamental
Overview
Gold continues to consolidate
in a tight range as the markets await the US CPI report due on Wednesday.
Overall, nothing has changed in terms of the fundamentals. The Fed is expected
to cut by 25 bps next week and deliver at least two more rate cuts in 2025.
In the bigger picture, the
trend should remain bullish amid the Fed’s easing cycle, but the short-term corrections
will likely be triggered by the repricing in rate cuts expectations. For now,
the market looks fine with three rate cuts by the end of 2025 as the pricing
remained unchanged despite lots of strong US data.
The US CPI report is going
to be a major event for gold. Higher than expected figures will likely trigger
another selloff, while lower than expected data should keep the precious metal
supported into new highs.
Overall, we shouldn’t
expect the same strong uptrend in gold going forward as we got used to in the
past couple of years as the conditions changed across the board.
In fact, the geopolitical
risk premium should ease with the Trump’s administration. Real yields might
either continue to fall slowly or just range for an extended period of time.
Last but not least, the new Treasury Secretary should reduce fears around the
US fiscal profligacy.
Gold
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that gold continues to consolidate around the major trendline. This is where the buyers keep on
stepping in to position for a rally into a new all-time high. The sellers, on
the other hand, will need the price to break below the trendline and the 2600 support to gain control and target a drop into the
next major trendline around the 2400 level.
Gold Technical Analysis
– 4 hour Timeframe
On the 4 hour chart, we can
see that the price is stuck in a range between the 2660 and 2620 levels. The
market participants will likely keep on playing the range until we get a
breakout on either side. On the downside though, be careful of potential
fakeouts as the sellers will need to break below the 2600 support to confirm the
breakout.
Gold Technical Analysis
– 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here as the choppy price action will likely continue
until the US CPI report due on Wednesday. The buyers will want to see lower
than expected figures to gain more conviction for a rally, while the sellers
will look for higher than expected numbers to push the price lower. The red
lines define the average daily range for today.
Upcoming
Catalysts
This week is going to be more tranquil on the data front. On Wednesday, we have
the US CPI report which is also going to be the main event of the week. On
Thursday, we get the latest US Jobless Claims figures and the US PPI.
See the video below
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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